Spring Budget 2024: Anticipated Reforms and Economic Projections

As March edges closer, the forthcoming spring budget from the UK government stirs a palpable sense of anticipation, particularly regarding the R&D scheme. With a slew of long-awaited adjustments anticipated to be revealed this year, speculation is rife against the backdrop of a swiftly evolving economic terrain.

Set for announcement on March 6th, this budget holds significance as the final major fiscal overhaul before the looming general election, mandated to take place by December 17th, 2024. The public eye is keenly fixed on economic reform aimed at mitigating the ongoing recessionary challenges.

While much attention is understandably focused on the projected changes within the R&D scheme, it remains imperative to grasp the broader implications, given that alterations in tax policies have reverberations across diverse business sectors. For those harbouring questions or concerns about the potential impacts of the forthcoming March developments on their R&D Tax Claims, seeking guidance from experts is advised.

Current Insights

At the forefront of anticipated alterations within the R&D domain is the proposed consolidation of the SME and RDEC schemes, slated for implementation come April. This amalgamation aims to streamline the application process for businesses while affording HMRC greater oversight on claims submitted. Notably, HMRC has significantly bolstered its team in recent years to combat erroneous claims, and the impending scheme changes are expected to further fortify their involvement.

Nevertheless, this transition is not without contention, with calls for potential scheme adaptations to be deferred until 2025 to facilitate a smoother integration process. While no official word has surfaced regarding a delay, and further postponements are not anticipated, collaborating with advisors remains pivotal for staying abreast of the latest developments within one’s claim process.

Projected Tax Adjustments

Beyond the realm of R&D, the budget is poised to usher in tax adjustments. Earlier this year witnessed a reduction in National Insurance contributions for employees, translating into modest increases in household incomes nationwide. Expanding on this trajectory, speculation abounds regarding a reduction in income tax, although the Chancellor has downplayed these rumours.

With pre-election tax reform likely to concentrate on alleviating the personal tax burden, businesses are anticipated to experience comparatively lesser reforms, thereby mitigating potential disruptions for those navigating R&D claims.

Amidst impending changes, the most prudent approach to ensure preparedness for the March 6th unveiling is through close collaboration with expert advisors for your claims. Reach out today to guarantee meticulous handling of your claim amidst these pivotal moments.

You can contact us today on 0330 002 1362 or email us at enquiries@kirbyandhaslam.co.uk.

Innovation Kirby & Haslam

Debunking R&D Tax Credit Myths

R&D tax credits are a fantastic opportunity that rewards UK businesses for their innovation, but with so much misinformation floating around online, this government-led scheme can seem confusing and therefore is often under-utilised. With over 20 years of experience, Kirby and Haslam have the expertise to separate facts from fiction. We have broken down the most common R&D Tax Credit myths to help you feel confident in your claim.

Myth 1: R&D Tax Credits are only for innovation within the scientific sector.

Whilst basic scientific research is a clear example of an eligible project, this government scheme is focused on encouraging applied science across all sectors. Applied science means addressing an issue within a business by using known scientific or technical principles. For your business, this could mean researching how you could streamline your business operations or developing and testing a new product.

Myth 2: You can only claim on completed projects.

This myth is entirely false. No matter the stage of completion, your R&D project may still be submitted for an R&D Tax Credit claim. Whether you’ve had to put your project on hold or completely abort it, your existing R&D efforts can still be rewarded.

Myth 3: You can only claim if your project is successful.

This government scheme was introduced with the sole purpose of encouraging innovation, whether it is successful or not. HMRC understands that there is always some risk in conducting innovative research, and they do not penalise businesses for this. So even if your project didn’t produce the results you were looking for, you can still claim R&D Tax Credits for your efforts.

Myth 4: You must create a completely new product or process to be eligible.

This is a common misconception that stems from outdated information. Previously, a business would have to discover or create a completely new product or process to be eligible for R&D Tax Credits. However, the government came to understand that this was an unreasonable expectation. HMRC now states, “Your project may research or develop a new process, product or service or improve on an existing one.” It is those last five words that really matter here. Improving upon a pre-existing process, product, or service is something many UK businesses are already doing and could be eligible to claim R&D Tax Credits for.

Myth 5: You can only claim for the current financial year.

When claiming R&D Tax Credits for the first time, you can claim for your last two financial periods. This means that if your current financial year is coming to an end soon, it’s best to claim before potentially losing out on a year’s worth of a claim. With this in mind, make sure to track all of the R&D expenses your business incurs and claim before the two-year deadline passes.