Changes introduced from 1 April 2021
R&D tax credit limited to £20,000 + 3x total PAYE+NIC liability of the company for the year. (Related party PAYE+NIC liabilities attributed to the R&D can be included within the CAP.)
The claim is not capped:
• If the R&D tax credit is less than £20,000.
• If the R&D claim meets the following two tests:
a. The company’s employees are creating, preparing to create or actively managing intellectual property arising from the R&D project.
b. 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.
Many genuine SME claims will be affected:
• Companies outsourcing large parts of their R&D projects.
• Companies where consumables or software form a large proportion of their R&D costs.