The UK’s Research and Development (R&D) tax relief system is set to be streamlined, as the government launches an 8 week consultation.
Currently there are two R&D tax relief schemes in place; the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.
The consultation, which will run until 13th March 2023, seeks to outline a proposal on how a single scheme could be designed, implemented and replace the incumbent programmes.
New R&D Tax Relief Scheme in the UK
In addition to harmonising the existing two schemes into one, the consultation aims to improve how R&D tax relief is issued to British businesses.
Budget setting for SMEs can be particularly challenging, especially when information is not completely clear and definitive.
Under the system, the precise amount of money a business can expect to receive through SME tax reliefs for R&D can only be determined at the end of their accounting period.
As part of a drive to simplify tax in the UK, the new scheme will look to improve information asymmetry for decision makers within small businesses.
Victoria Atkins MP, Financial Secretary to the Treasury, outlined the significance of upcoming changes to the current tax regime, commenting that “getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.”
“I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.”
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