Page 8 - HMRC changes APR23
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SPOTLIGHT – R&D TAX RELIEF CHANGES AND THE IMPACT ON YOU
04. Changes to tax credit relief rates
for the SME scheme
(continued)
8
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provide evidence that their R&D expenditure meets the 40% threshold. While simultaneously providing another opportunity for less scrupulous companies to take advantage of the higher tax credit rate!
The net effect of these changes will be a cut in the funds flowing back into SMEs, ultimately reducing the funds available for reinvestment by between 13% and 40%, depending on whether a company is paying tax or claiming tax credits and, in turn, affecting SMEs’ willingness and ability to maintain or grow future investment.
Whilst it fitting that measures should be introduced to address concerns that the SME regime has been subject to abuse and error, the cuts to the abovementioned SME regime have gone too far. These changes will significantly impact the resources available to SMEs for reinvestment in their businesses, creating a hostile environment, endangering management teams’ commitment to ongoing investment, and ultimately compromising businesses’ competitiveness.
