Merged R&D scheme- what you need to know
The government confirmed in the Autumn Statement 2023 that a merged R&D tax relief scheme will be introduced for accounting periods beginning on or after 1 April 2024. This represents a significant change to R&D tax incentives in a very short timeframe, so it’s imperative that your business prepares without delay.
As the UK’s leading R&D tax consultancy, ForrestBrown is in the best position to provide proactive, actionable advice tailored to your business. We’ve engaged with every R&D consultation and always demonstrated our commitment to championing innovative businesses. Let us support you today.
Find out what the merged scheme means for your business
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What is the merged R&D scheme?
The merged R&D scheme sees two of the UK’s current R&D tax relief incentives brought together into a single scheme:
Enhanced tax relief and payable credits for qualifying SME expenditure.
R&D expenditure credit (RDEC) for large businesses, SME subcontractors and subsidised R&D expenditure.
The merged scheme is sometimes referred to as the R&D single scheme or simplified scheme. It will be implemented in a similar way to the existing RDEC scheme with a few notable distinctions.
Who is impacted by the merged R&D scheme?
If you’re claiming R&D tax relief, it is likely that you will be impacted by the introduction of the merged scheme.
Despite the intention to simplify R&D tax relief by merging the previous SME and RDEC schemes, there are still differences you need to be aware of depending on the type of business you are and the contractual arrangements under which you are carrying out R&D.
If you’re an SME
You need to identify whether you fall under the R&D intensive incentive or the merged scheme. Remember, to be classed as an SME for R&D tax purposes you must have fewer than 500 staff, and either a turnover of no more than €100 million or gross assets of no more than €86 million.
You will also need to consider whether the decision to carry out R&D sits within your business or elsewhere in the supply chain. Generally, companies will not be able to make a claim if R&D has been contracted to them.
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