They also confirmed an enhanced regime for R&D intensive SMEs. The merged scheme will reduce the tax rate for loss-making companies from 25% to 19%. Additionally, the merged scheme will lower the threshold for additional support for R&D intensive loss-making SMEs to 30%.
Companies claiming the existing SME tax relief and meeting the definition for R&D intensity will qualify for a higher payable credit rate of 14.5%. This results in saving £27 per £100 spent on qualifying R&D in terms of effective tax.
There will be a one-year grace period for companies that fail to meet the R&D intensity threshold due to a qualifying one-off event. This will apply to companies that had successfully claimed enhanced support in the previous year. The one-year grace period will apply to accounting periods beginning on or after 1 April 2024.