The Research and Development scheme had a small change which came into effect just after, 1st April 2021.
What is the new Measure & Who is Likely to be affected?
This change will affect SMEs (small or medium-sized enterprises) that carry out R&D related activities.
The new proposal will limit the amount of payable R&D Tax Credit which an SME can claim to £20,000 plus 300% of its total PAYE (Pay as you Earn) and NIC’s (national insurance contributions) responsibility for the period. A company is exempt from the cap if:
- It does not spend more than 15% of its qualifying R&D expenditure on subcontracting R&D to EPW’s (externally provided workers).
- The employees are creating, preparing to create or managing IP (intellectual property).
Even though the change is only minor, it feels like there is a fair amount to digest therefore, we have tried to break it down into more palatable bitesize chunks.
- The following changes to the R&D SME tax relief came in on 1 April 2021.
- A cap on the amount of the payable R&D tax credit will be introduced.
- A company making a small claim for payable credit below £20,000 will not be affected by the cap.
- A company will be able to include related party PAYE and NIC when calculating the cap and these will be subject to the 300% multiplier
- A company’s claim, of any size, will be uncapped if it meets two tests. These tests require that a company’s employees are creating, preparing to create, or actively managing Intellectual Property (IP) and that its expenditure on work subcontracted to, or externally provided workers provided by, a related party is less than 15% of its overall R&D expenditure.
We don’t want you to miss out on this tax relief, so we urge you to check your eligibility today (it takes just a few minutes). If you’re eligible, great! If not, then at least you have the peace of mind of knowing that you explored the possibility. https://www.greenjellyfish.co.uk/contact/
Find out how much you could claim by using our handy R&D Calculator!