Spring Budget & its Effects on R&D Claims

Posted 7 March 2024

Yesterday Jeremy Hunt unveiled the eagerly anticipated spring budget, and while we awaited updates on R&D tax relief, the budget announcements surprisingly remained quiet on any further changes to the scheme, apart from the announcement that “HMRC will establish an expert advisory panel to support the administration of the R&D tax reliefs. The panel will provide insights into the cutting-edge R&D occurring across key sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants.”

Whilst this presents an excellent opportunity for us to shift our focus towards implementing and preparing our clients for the already enforced upcoming changes. It also highlights the importance of preparing a robust and technically accurate report to subsidise the R&D claim and ensure that the new expert advisory panel have all of their enquiries answered by leaders in science and technology who can confidently discuss reports in detail and without hesitation as to the report’s relevance in the R&D claim. Luckily, CBTax has dedicated teams established for Tax Resolutions and an in-house team of experts in science & technology to ensure that all of our clients receive robust and watertight technical reports that help to achieve a successful R&D claim.

While there has been a consultation initiated by HMRC regarding measures to elevate standards in the tax advisory market, it is evident that HMRC perceives a prevalence of misguided and inaccurate advice provided by R&D firms. Consequently, they are contemplating measures to address this issue through a comprehensive 12-week consultation process aimed at improvement.

Nevertheless, taxation, whether on a personal or corporate level, impacts us all profoundly.

Here are some of the key highlights from yesterdays announcement:

  • National Insurance Contributions will see a further reduction, dropping from 10% to 8% starting April 2024.
  • Capital Gains Tax is poised for adjustment, with the higher tax rate on residential properties set to decrease from 28% to 24%.
  • Stamp Duty Land Tax relief will be eliminated for multiple dwellings.
  • UK Residency guidelines are undergoing a significant overhaul, with the abolishment of non-domicile status. A simplified replacement system is scheduled to take effect from April 2025, aiming for fairness by subjecting non-doms to the same tax rates as UK residents after four years of residency.
  • Furnished Holiday Lets, which previously enjoyed tax relief, are facing abolition.
  • Child Benefit will undergo changes, with household income now being the basis for assessment rather than individual income. The threshold for high-income tax will increase from £50,000 to £60,000, with benefit withdrawal occurring once household income surpasses £80,000.
  • A new British ISA has been announced, offering investors an additional £5,000 tax-free allowance.

The landscape of taxation is ever-evolving and intricate. At CBTax, our team of Chartered Tax Advisors remains dedicated to staying abreast of new regulations and legislation to ensure that we are offering the most up to date and compliant service to our clients.