Autumn Statement 2023 Research and Development Tax Reliefs Reform
This technical note provides more detail on the reforms to research and development tax reliefs announced at the Autumn Statement 2023.
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The government recognises the important role that research and development (R&D) plays in driving innovation and economic growth as well as the benefits it can bring for society. The UK’s R&D tax reliefs have a key role to play in supporting R&D investment in a fiscally sustainable way.
This is why at Autumn Statement the Government announced reforms to the R&D tax reliefs to simplify and improve the system, which will be legislated for in the Autumn Finance Bill, as well as a package of spending measures to support our scientists and researchers.
The government has published a technical note providing further detail on these reforms to the R&D reliefs before the Finance Bill is published later this year.
It sets out the main changes to the policy design of the proposed merged research and development expenditure credit (RDEC) and the enhanced support for R&D intensive SMEs which was announced at Budget 2023. This follows a technical consultation on the draft legislation that was published in July 2023.
At Spring Budget 2021, the government launched a review of R&D tax reliefs to ensure the UK remains a competitive location for cutting edge research, the reliefs continue to be fit for purpose and taxpayer money is effectively targeted. The Government is now concluding that review with the announcement of the merged scheme.
Further action may needed to reduce the unacceptably high levels of non-compliance in the R&D reliefs, and HMRC will be publishing a compliance action plan in due course. The government will also continue working with industry to develop the enhanced support for R&D intensive SMEs, and consider further simplifications.