PriyaPatel
TLDR:
- New simplified R&D tax relief scheme merging RDEC and ERIS programs to benefit insurtechs and startup brokers
- Impacts of the merged scheme are yet to be seen, with potential benefits for firms investing in technology or science-based projects
Key Elements:
Brokers and MGAs investing in software that is new, improving a process or addressing an uncertainty could benefit from R&D tax relief. The new scheme, merging RDEC and ERIS programs, will come into play for accounting periods beginning on or after 1 April 2024. Tom Jones, director of tax credit consultancy ForrestBrown, highlighted the need for firms to consider the impacts of the merged scheme on their R&D claims moving forward.
R&D tax credits enable firms working on technology or science-based projects to recoup capital through a corporation tax relief. The impact of the merged program is expected to be positive for larger firms, though some restrictions will be implemented, such as limiting overseas expenditure towards R&D projects. The Spring Budget also proposed the introduction of a new R&D advisory panel to support the administration of tax relief.
Various changes around R&D tax relief were confirmed in the Spring Budget, including the creation of an additional information form for R&D claims submitted after August 2023. Insurtechs and startup brokers need to be aware of these changes and pre-notify HMRC within six months after their financial year-end to claim R&D tax relief. The tightening approach to R&D tax relief aims to reduce erroneous claims and ensure fair distribution of tax relief.
