UK government consults on draft legislation on merged R&D tax relief 25 Jul 2023

Draft legislation has been published by the UK government on a proposed merged R&D tax relief scheme. If implemented, the reform would affect companies claiming R&D tax relief under either the Research and Development Expenditure Credit (RDEC) or the small or medium enterprises (SME) R&D relief. Companies entitled to the higher rate of SME payable tax credit because they are loss-making R&D intensive firms would not be affected.

The move follows a consultation on a potential merged scheme between January and March 2023 and allows the government to keep open the option of launching such a plan from April 2024. Tax simplification would provide more clarity and certainty to SMEs and help to drive innovation, the government states.

The draft legislation proposes that the unified R&D relief would be delivered in a similar way to the RDEC, namely as an expenditure credit. However, companies would be able to claim for payments made to subcontractors for R&D projects, which is possible under the current SME scheme.

Read more details on the draft legislation here.

If you are an SME working on R&D in the pharma sector, PMC has experts on hand to assist with each step of the journey, from regulatory strategy at product launch to ongoing development and compliance. Contact us via hello@pharmamedic.co or T: +44 (0) 208 168 1668.