New HMRC guidance on R&D tax relief

The new merged scheme for research and development (R&D) tax relief takes effect for accounting periods beginning on or after 1 April 2024. Loss-making, R&D-intensive small and medium-sized enterprises (SMEs) can benefit from additional support. The merged scheme replaces the reliefs for SMEs and the research and development expenditure credit (RDEC).

HMRC has published guidance on how to make a claim under the merged scheme and for the additional support for R&D-intensive SMEs. HMRC has published guidance on issues affecting SMEs in Northern Ireland. It has also updated its guidance on the conditions for additional support and the information to provide when making a claim.

HMRC has made changes to its draft guidance on overseas expenditure and contracted-out R&D. The changes have been made in response to feedback provided by ICAEW’s Tax Faculty and others. The guidance will be included in HMRC’s manuals in due course.

The new merged scheme of R&D tax relief is the subject of the most recent edition of the Tax Faculty’s Tax Track podcast. Topics discussed include the background to the changes to R&D tax relief; the new rules on overseas expenditure and contracted-out R&D; and a recent case where a company successfully appealed against a penalty for making a careless error in its R&D tax relief claim.