R&D Intensive Companies

SMEs value to the innovation ecosystem

The government announced at Spring Budget 2023 that qualifying Research and Development (R&D) intensive small and medium enterprises (SMEs) would receive additional tax relief from 1 April 2023.

The essence of the changes is to preserve the R&D tax credit of 14.5% which is now reduced to 10% for other, non-intensive loss-making R&D SMEs as part of wider measures. R&D intensive SMEs are defined as having qualifying R&D expenditure that constitutes at least 40 per cent of the Company’s (and group connected) total expenditure. The policy is to recognise the important role that R&D plays in driving innovation and economic growth as well as the benefits it can bring for society. Subject to legislation the change will apply from 1 April 2023 and will need to be indicated via the additional information form required for all claims from 8 August 2023.

Eligible companies will be able to claim once the legislation comes into effect by either delaying submission of their claim (normal time limits for making or amending a claim will remain in effect).