Understanding the New R&D Tax Credit Rules for 2024

As of 1 April 2024, significant changes have been implemented in the UK’s Research and Development (R&D) tax credits system. These reforms are crucial for small and medium-sized enterprises (SMEs) aiming to claim R&D tax credits. Here’s a detailed breakdown of the key changes, additional compliance requirements, updated tax credit percentages, eligibility criteria changes, and what can and cannot be claimed.

Key Changes to R&D Tax Credits:

Merger of Schemes

Increased Support for R&D-Intensive SMEs

Restrictions on Nominations and Assignments

Documentation and Reporting

Advance Assurance

Providing notice

Updated Tax Credit Percentage

Eligible Projects

Qualifying Expenditure

Included: Staff costs (salaries, NICs, pension contributions), materials consumed or transformed in R&D, software used in R&D, and utilities (power, water, fuel).

Excluded: Production and distribution of goods and services, capital expenditure, and costs unrelated to the R&D activities (e.g., sales, marketing).

Non Qualifying Expenditure

Production Costs: Costs related to production and distribution of goods and services.
Capital Expenditure: Investment in land, buildings, and other capital assets.
Indirect Costs: Overhead costs such as rent, rates, and utilities that are not directly related to the R&D project.
Marketing and Sales: Costs associated with sales, marketing, and commercial


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