Spring Budget 2024: R&D Tax Relief update

The last 12 months or so have seen the announcement of a number of changes to the R&D Tax Relief regime, alongside a notable increase in compliance activity by HMRC.  That there were no new announcements in the Spring Budget 2024 is perhaps some welcome news!

So what changes do we already know about?

From 1 April 2023

Rate changes apply which reduce the value of SME claims, and increase the benefit of the Research and Development Expenditure Credit (RDEC).  

Qualifying expenditure under the SME regime will only be uplifted by 86% for costs incurred post 1 April 2023, compared to 130% before.

The rate of the repayable tax credit for loss making companies is reduced to 10% for all companies, except those who meet the conditions to be R&D intensive.  This means that the value of a claim potentially reduces from as much as 33p for every £1 of qualifying spend to just 19p.

Meanwhile, the change in RDEC rate increases the benefit from c.10.5p to 15p for every £1 of qualifying spend.

For Accounting periods starting on or after 1 April 2023

Costs related to cloud computing and R&D related to advances in pure mathematics should qualify for relief.

Advance notification

New claimants (or those which have not claimed within the past 3 years) need to submit advanced notification within 6 months following the end of the accounting period for which it has a claim.  

An advance notification form (ANF) has to be made in time to be able to claim.  This is particularly key for any start up or business wanting to make a claim for the first time.

From 8 August 2023

Introduction of the new additional information form (AIF) – this is a mandatory online form submitted in advance of the tax return to capture comprehensive claim details and data.  A claim is not valid without first filing the AIF!

For Accounting periods starting on or after 1 April 2024

The introduction of a single merged RDEC scheme (unless a claimant is R&D “Intensive”).  

However, there are some differences under the new merged RDEC scheme:

• Contracted out R&D – the company making the decision to do the R&D and bearing the risk should get the relief.


• Grants and RDEC no longer mutually exclusive – Grant funded R&D also attracts relief under RDEC.


• Restriction for expenditure on overseas R&D (delayed from 2023) takes effect  (some narrow exceptions can apply).


• Loss making company – RDEC taxed at small profits rate of 19%, taking the benefit to 16.2p for every £1 of qualifying spend.

No nomination for R&D tax credits – all repayments are to be routed to the claimant (not an agent or lender).

HMRC checks

A good number of these changes were made to the regime in the interests of reducing perceived fraud and error.  These are likely to have some positive impact. 

A few additional hoops to jump through to notify qualifying activity, or provide the necessary level of information to submit a valid claim, should not deter genuine claimants. After all, R&D Tax Relief still represents a really valuable and targeted subsidy to help de-risk investment in R&D.

These changes, along with the increased enquiry activity from HMRC to review and check claims (which can be targeted to a particular sector or random), means that it has never been more important to ensure claims are compiled with expert advice and assistance from a regulated accountant or agent.

Contact us

If you have any queries related to accessing the benefits of R&D Tax Relief, please feel free to make contact with a member of our R&D Innovation Team.