Autumn Statement 2022: A bright future for R&D tax relief

In the aftermath of the latest November 2022 budget statement, we now know more about Jeremy Hunt’s approach to R&D tax relief. Having digested the statement and worked with our tax experts to assess the impacts on our customers and the future values of R&D claims, I remain optimistic.

Autum Statement 2022 | Easy R&D

R&D tax relief statement highlights

Here are 5 reasons why I can see the sunny side of Jeremy Hunt’s policies and see a bright future for R&D tax relief.

  • Jeremy Hunt only discussed R&D tax relief for a short time in his statement to Parliament, and in these six short minutes he announced significant changes in the way the scheme will operate. But, despite pre-statement doom-mongering in the media, he maintained both the SME and RDEC programmes for the tax year starting 1 April 2023. He committed to Government investment to support R&D suggesting that the total R&D spend would remain level and he is establishing a consultancy programme to improve the design and management of R&D incentive schemes. These actions demonstrate, to me, that he wants a fair and better R&D incentive system and that he is investing time to evolve the scheme in a reasonable and measured way. At Easy R&D, we take a long term and measured approach to tax relief claims, and it appears so does he.
  • It is clear the changes in the SME scheme will drop the average value of a claim. In parallel, Corporation Tax rates are increasing, so the overall impact has been softened for businesses with profit over £50,000. The hardest hit SME claimants will be the businesses with profits under £50,000, who will continue to pay 19% Corporation Tax but will be able to claim 86% of the R&D investment (vs 130% today) or those businesses with a claimable loss, who will have a lower cash-credit rate on surrendered losses (18.6% vs. 33.4% today).
  • Even with these changes, for any director assessing a future claim the SME scheme remains an attractive and generous programme. Tellingly, we have yet to see any of our 1,000 customers suggest that these planned changes will turn them away from making a future claim. In fact, we are seeing continued demand from businesses under cost pressures seeking to claim legitimately for historic investment in R&D, and from businesses investing in productivity boosting innovation programmes.
  • Clearly, the good news was the rise in the RDEC incentive that will be applied from 1st April 2023, for claims by larger businesses. While still less generous than the SME programme it will become an even more powerful incentive for business risk taking and investment in innovation, with the RDEC relief rising to 20% before tax (vs 13% today). 
  • With Rishi Sunak as PM, we have a leader who has clearly stated his desire to enhance the UK’s R&D performance and with Jeremy Hunt we seem to have a fairly cautious and balanced economic strategist. To me it feels like a team that will take a fair and business-minded approach, avoiding click-bait, knee-jerk strategic announcements. Rumours are that Hunt’s Treasury is assessing integrating the two current schemes into a single scheme that is closer to the RDEC programme. I will be putting Easy R&D’s views forward in the planned consultation process – and I will be seeking to represent how the R&D tax relief schemes could be improved for businesses like yours across the UK. Do drop me a line at [email protected] with any feedback you want us to reflect in the consultation process.

Chancellor of the Exchequer | Easy R&D

As with many tax changes, the latest announcements will make the claim assessment process potentially more complex for some businesses. This is especially true if you are a loss-making business with significant R&D investment. Our Easy R&D expert team is here to advise you on the options that you have for R&D tax relief claims and what may be the best approach for your company or business group.

Finally, a note on the HMRC approach to compliance checks. Compliance checks have been ramped up, and despite a rather scattergun approach to investigations, HMRC have uncovered an undetermined number of claims that are criminal in design. The numbers involved are a powerful reminder that any Government incentive scheme may become the target for unscrupulous operators. But my takeaway is that the actions of a small criminal minority do not reflect the legitimacy and positive impacts that thousands of genuine R&D claims are making to businesses across the country. We look forward to HMRC rooting out more illegal or erroneous claims, and getting even more sophisticated and targeted in their enquiry and investigation processes. 

If you want to read a fuller debrief from our tax experts on the details of planned 2023 changes to the SME and RDEC schemes, please click here. This piece includes some useful worked-up examples of the impacts that the changes will have on different companies. 

Darren Wilmot

Darren Wilmot 
Managing Director, Easy R&D 


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