Budget 2023 – A new R&D tax credit scheme for SMEs

The Chancellor committed at the Autumn Statement 2022 that he would consider providing more support to R&D intensive SMEs. Today the Chancellor announced a new scheme for R&D tax credits for SMEs in the UK, from 1 April 2023.

The new scheme, is targeted at loss making R&D intensive SMEs, those most impacted by the changes that were introduced at that Autumn statement last year.

What is an R&D intensive SME?

A company is R&D intensive if its qualifying R&D expenditure is worth 40% or more of its total expenditure. The SME definition is thought to remain as it was under the old R&D tax credits schemes.

Eligible companies can claim back £27 from HMRC for every £100 of spend on R&D, instead of £18.60 currently available to SMEs after the changes announced last year.

• £100 qualifying expenses
• £86 uplift under new rules by 86%
• £186 total R&D claim
• £18.60 repayment from HMRC at 10% for surrendered loss under new rules
• £26.97 repayment from HMRC at 14.5% for surrendered loss for R&D intensive companies

It’s a long way from the old rules, with 130% uplift and 14.5% repayable tax credit which would have given £33.35 repayable for all SMEs for every £100 of qualifying spend, but it’s a step in the right direction.

If you have any questions on this or any related matter please contact us