As announced in the Autumn Statement 2022, for expenditure on or after 1 April 2023 the Research & Development Expenditure Credit (RDEC) rate will increase from 13% to 20%.
Simultaneously, the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86% and the SME payable credit rate will decrease from 14.5% to 10%.
As previously announced, the definition of qualifying expenditure is being expanded to include data and cloud computing costs.
The government wants to move towards a "simplified, single RDEC-like scheme for all" and has said it will consult on whether further support is necessary for "R&D intensive" SMEs. It also wants to combat perceived abuse of the R&D tax credits system, with HMRC significantly increasing its scrutiny of R&D claims in recent months.
