Draft legislation, proposing the merging of the existing R&D tax relief schemes into one, has been announced by the government.
The new single R&D tax relief would incorporate aspects of the existing SME R&D tax relief and R&D expenditure credit schemes and would be delivered as an expenditure credit.
An initial consultation on the proposal ran between January and March of this year, and the legislation is now open to technical feedback.
The government is yet to decide whether to merge schemes, but “intends to keep open the option of doing so from April 2024″.
The government went on to say: “This [the merger] would present significant opportunities for tax simplification, including having a single set of qualifying rules, being able to remove the exceptions for subcontracting to certain types of entity, known as ‘qualifying bodies'”.
Ellen Milner, Director of Public Policy at the Chartered Institute of Taxation, said that, despite the government saying it has not yet made a decision, “the publication of draft legislation suggests this is more likely than not”.
She continued: “We remain concerned that planning for a merger of the schemes in April 2024 is overly ambitious.
“The current pace of change in the R&D relief regime is already challenging for businesses and their advisers, with these proposed changes coming on top of others in the Finance Act passed last week as well as serious ongoing problems around the compliance process for the relief.”
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