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Significant research and development tax credit changes from 1 April 2023: What are the tax relief changes?

New Research and Development Tax Relief Changes from 1 April 2023 – New rules for claiming Tax Credit


In April 2023, the landscape of Research and Development (R&D) claim submission in the UK underwent a significant transformation. This change follows a series of reforms to the R&D tax relief scheme. This article serves as a comprehensive guide to these forthcoming changes, with a particular focus on the mandatory Additional Information Form.

The Additional Information Form

Starting from the 1st of August 2023, HM Revenue and Customs (HMRC) will require all companies to submit an Additional Information Form as supporting evidence for an R&D claim before submitting the Company Tax Return. This new requirement marks a significant departure from the existing process. You can review the complete guidance here(HMRC link) for further details.

The Additional Information Form, which supersedes the previous R&D claim report, is an online version of the claim report that is submitted directly to HMRC’s systems. Post 1st August 2023, HMRC will reject any claims not submitted through this Additional Form, and submission should precede the Company Tax Return.

What Does the Additional Form Require?

The Additional Form necessitates some extra information for processing an R&D claim benefit. This includes:

  • Contact details of the primary senior internal R&D contact in the company responsible for the R&D claim
  • Contact information of any representative involved in the R&D claim
  • VAT registration number
  • Employer PAYE reference number
  • Unique Taxpayer Reference (UTR)
  • Identification of business type, for instance, your current SIC (Standard Industrial Classification) code
  • A breakdown between direct and indirect qualifying R&D activities
  • Additional cost categories for accounting periods starting post 1st April 2023 (cloud computing, data licence costs)
  • The total number of R&D projects in the financial year and a breakdown of the R&D costs allocated to each project
  • A standardised set of questions for each R&D project narrative

When Should the Additional Information Form be Submitted?

This form should be dispatched to HMRC before the company’s Corporation Tax Return is submitted. If this protocol is not followed, HMRC will remove the claim for R&D tax relief from the Company Tax Return and notify the company.

It’s crucial to understand that an amended tax return must be filed if you have already submitted your tax return and subsequently submit the additional information form. The earlier tax return will be superseded by the revised one in alignment with HMRC’s guidance.

Implications for Future Claims

This transformation is monumental; it modifies the submission process and how you collect and correlate activities. It’s important to ask yourself if the new procedure mirrors your current in-house claim process. If not, it might be the right time to seek assistance from R&D specialists whose processes are more attuned to the new approach instituted by HMRC.

Preparing for the Additional Information Form

As the R&D landscape continues to evolve, staying informed and prepared is crucial. Should you require further clarification, our experts are available to elucidate the new procedure.

The changes to the R&D claim submission process in April 2023 are significant, and understanding them is essential for businesses. By staying informed and preparing for these changes, you can ensure that your business continues to benefit from the R&D tax relief scheme.

Frequently Asked Questions (FAQs)

Q: What are the significant changes to research and development tax credits?
A: From 1 April 2023, there will be significant changes to the research and development tax relief available. The changes affect the qualifying expenditure credit rate, which will increase from 13% to 20%.
Q: When will the tax relief changes come into effect?
A: The changes to the tax relief system for research and development expenditure credit will come into effect from 1 April 2023.
Q: How do I know if I qualify for relief?
A: To qualify for relief, your company must deliver a company tax return, online or on paper, by the filing deadline. You must also have incurred expenditure that qualifies for a relief claim and need to be endorsed by a named senior officer.
Q: What is qualifying expenditure?
A: Qualifying expenditure is the expenditure that is incurred on research and development activities. This includes costs associated with employing staff, outsourcing work, and purchasing materials.
Q: How much tax relief is available?
A: The amount of tax relief available depends on your total expenditure on research and development activities. From 1 April 2023, the rate changes to 20% of the qualifying expenditure.
Q: What is corporation tax relief?
A: The corporation tax relief is available to companies undertaking research and development activities. It enables them to reduce their corporation tax bill or claim a payable credit.
Q: When will the rate changes apply?
A: The rate changes will apply from 1 April 2023.
Q: Will these changes affect the tax relief available for SMEs?
A: Yes, the changes will affect the tax relief available for SMEs. They will reduce from 130% to 86% uplift on their qualifying expenditure.
Q: Do I need to inform HMRC of my relief claim?
A: Yes, you will need to inform HMRC of your relief claim. You can do this by including company tax return details or submitting a claim separately. And see above about the Additional Form that is now required.
Q: What is the Section 1006 Income Tax Act?
A: Section 1006 of the Income Tax Act 2007 sets out research and development tax relief rules.


Act Now

Don’t let the changes in the R&D landscape catch you off guard. Stay ahead of the curve and ensure your company’s smooth transition into the new R&D claim submission process. Our team of experts is ready to guide you every step of the way. Click below to schedule a free consultation today and let us help you navigate the R&D changes from April 2023. Your company’s future in innovation starts here. Act now!