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Spring Budget 2021: R&D claim update

The long delayed SME cash credit cap was announced to start on 1 April 2021. The government also revealed plans of a consultation on the effectiveness of the two R&D tax credits schemes to ensure the UK is a competitive place for cutting edge research.

The Chancellor made two announcements that will be of interest to businesses making R&D claims. Firstly, as highlighted in previous budgets, HMRC are introducing a PAYE cap for SME cash back claims starting on 1 April 2021. This cap kicks in for cash payments above £20,000 and limits the additional cash payment to three times the PAYE and employers NIC incurred by the claimant company. Our R&D tax team has a detailed insight available that will run you through the complexities of the proposed legislative changes.

The second proposal announced in the Budget is to conduct a consultation to review the effectiveness of the two R&D tax credit schemes. Those of you with long memories might spot that this appears to be a rerun of a very similar exercise undertaken by Phillip Hammond back in 2017. It is a positive sign that the current government is supportive of the R&D tax credit schemes and keen to ensure they are as effective as possible. Indeed our hope this time round is that the current government will be more open to suggestions from businesses to improve the scheme and will seek to make changes off the back of the consultation to ensure that the UK remains competitive against R&D schemes offered by other countries.

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Iain Butler

+44 (0)20 7556 1343
butleri@buzzacott.co.uk
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The Chancellor made two announcements that will be of interest to businesses making R&D claims. Firstly, as highlighted in previous budgets, HMRC are introducing a PAYE cap for SME cash back claims starting on 1 April 2021. This cap kicks in for cash payments above £20,000 and limits the additional cash payment to three times the PAYE and employers NIC incurred by the claimant company. Our R&D tax team has a detailed insight available that will run you through the complexities of the proposed legislative changes.

The second proposal announced in the Budget is to conduct a consultation to review the effectiveness of the two R&D tax credit schemes. Those of you with long memories might spot that this appears to be a rerun of a very similar exercise undertaken by Phillip Hammond back in 2017. It is a positive sign that the current government is supportive of the R&D tax credit schemes and keen to ensure they are as effective as possible. Indeed our hope this time round is that the current government will be more open to suggestions from businesses to improve the scheme and will seek to make changes off the back of the consultation to ensure that the UK remains competitive against R&D schemes offered by other countries.

Looking to contribute to the R&D consultation process?

Looking to contribute to the R&D consultation process?

To contribute to the consultation and have your say in future design of the R&D tax credits scheme please get in touch and we will keep you up to date with the submission process.

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