Alvarez and Marsal

A&M Tax Advisor Update

UK R&D Tax Relief: With an increase in R&D tax spend, comes greater scrutiny. A&M is prepared for this, are you?

Richard Syratt, Managing Director

rsyratt@alvarezandmarsal.com

David Byrne, Senior Director

dbyrne@alvarezandmarsal.com

Paul Wong, Senior Director

pwong@alvarezandmarsal.com

November 3, 2021 / UK

The UK R&D Expenditure Credit (RDEC) benefit for large companies has recently increased to a gross 13 percent, and for small and medium-sized enterprises (SME), it is up to 33.35 percent of qualifying expenditure. These benefits can offset tax liabilities or, crucially in these challenging times, be refunded net of tax as cash.

The Chancellor has announced that following the consultation launched at Spring Budget 2021, R&D tax reliefs will be reformed to target abuse and improve compliance. These changes will take effect from April 2023 and the two key upcoming changes are (1) the addition of data and cloud costs and (2) focusing support towards innovation conducted in the UK only. Please see “HMRC Treasury consultation” overleaf for more details.

HMRC’s annual statistics on the UK R&D tax regime confirm the increasing popularity of these generous benefits.

 

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