Chancellor outlines plans to improve R&D tax relief in the Budget

Standing before Parliament, the Chancellor Rishi Sunak outlined several plans to invest in innovative UK businesses and the research and development (R&D) sector.

The nation has set a target to raise total investment in R&D to 2.4 per cent of UK GDP by 2027, with the country’s existing R&D tax reliefs playing an important role in achieving this.

During the Budget 2021, the Chancellor confirmed a review of the existing R&D tax reliefs, which will be supported via consultation with key stakeholders.

Through this consultation, the Government hopes to explore the nature of private-sector R&D investment in the UK and how the tax relief system can better support innovative work.

This new wide-ranging consultation process will look at the two key elements of the tax credit system, the SME scheme and the Research and Development Expenditure Credit (RDEC).

In particular, the review hopes to consider:

  • How the two R&D relief schemes support R&D in the UK;
  • How they operate; and
  • How effectively they interact with modern R&D practices.

Importantly, the consultation will also look at the definition of R&D and the scope of what should qualify for relief, to ensure that the system is still fit for purpose.

Stakeholders will be asked to share their views on the two current systems and whether they should be merged in some way to make the relief simpler to claim.

The consultation document states: “Having two schemes also means having two, overlapping sets of rules instead of a single coherent system.

“The 2017 Budget promised to simplify the R&D claim process, and stakeholders have suggested that ‘RDEC for all’, potentially with a higher rate for SMEs, could be one such simplification.”

HM Revenue & Customs, which operates the scheme and manages claims, also wants to know whether the claims process might be improved, both to give a better experience for claimant companies and to improve controls.

At Made.Simplr we work with lots of businesses and accountancy firms to help automate the claims process. Like many, we would welcome any improvements to the R&D tax relief system that would enhance companies’ ability to claim.

If you or any of your clients are interested in making an R&D tax credit claim and would like to know how our cloud-based system can save you time and money, please book a demo with our team now.


content team

Our Content Team is the R&D specialised, curious and thorough group behind made.simplr's blog and R&D resources, covering topics of interest to the R&D, accounting and innovation world.

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