Further changes to R&D tax relief regime: Autumn Statement 2014


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Chancellor George Osborne’s Autumn Statement provided for further changes to the already attractive Research and Development (R&D) tax incentive.

With effect from April 2015, the maximum reliefs in respect of qualifying expenditure available to Small and Medium Sized Enterprises (SMEs) will go up from 225% to 230%. This increased rate, along with the payable credit of 14.5%, will mean that companies can receive over £33 of cash from HMRC for every £100 of qualifying spend.

In addition, there will also be an increase in the rate of the R&D Expenditure Credit (RDEC) for large companies. This will increase from 10% to 11%. The increased rate of the RDEC will increase the benefit for large companies from 8% to 8.8%. Again, welcome news for innovative companies investing in research and development.

However, there is a less welcome change that will apply from 1st April 2015. This revision to the rules will mean that expenditure on any ‘consumable items’ (such as materials) included in products will cease to qualify. This is very much a negative development and will affect many (potential) claimants.

Draft legislation will be published on 10th December 2014.

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