R&D tax relief and the budget

13 Mar 2020

The budget earlier this month held some good, though not unexpected, news for those claiming R&D tax relief.

The proposed increase to the RDEC rate will go ahead and will increase from 12% to 13% which is good news for larger companies as it means the benefit they receive will be greater.  There are no plans to increase the benefit of the SME scheme as yet but SMEs who are claiming under the RDEC scheme for work they have undertaken on behalf of a large company will be better off. This will also be the case for SMEs who have received grant funding making them ineligible for the SME scheme or those owned by large companies who can only claim under the RDEC scheme.

The proposed PAYE cap on Payable Tax Credits is to be delayed until 1st April 2021.  A similar cap was removed a number of years ago and, since then, there has been widespread abuse of the system.  As yet, a way in which this can be implemented without penalising some companies with genuine claims has not been found.

The government will consult on whether expenditure on data and cloud computing should qualify for R&D tax relief.  This could be very beneficial for companies involved in software development who are utilising cloud services such as AWS (Amazon Web Services) as currently the costs for these cannot be included as part of an R&D claim.

If you would like any further detail or have questions on anything R&D related, please get in touch via info@randdconsulting.co.uk or 0330 660 0474.