R&D tax relief changes in April 2023 – Are you ready?

R&D tax reliefs changes in April

R&D tax relief changes in April 2023 – Are you ready?

In his Autumn Budget, Chancellor Jeremy Hunt announced many R&D tax relief changes, including funding allocation, which we will see implemented in April.

The rates paid by the Research and Development Expenditure Credit (RDEC) for larger firms and small to medium (SME) R&D relief schemes are changing. 

Under these changes, from 1 April, the RDEC rate will be increased to 20% from 13%.

Meanwhile, we will see a reduction of the SME deduction rate on qualifying expenditures from 130% to 86%, whilst the SME credit rate decreased to 10% from 14.5%.

In November, the Chancellor announced new eligibility criteria from 1 April 2023.

Overseas R&D

Subcontracted R&D expenditure outside the UK will no longer be eligible for inclusion in R&D claims from April 2024. The aim is to bring more R&D activity to the UK and incentivise companies to move operations into the UK.

Cloud costs are now eligible

Currently, cloud-based technology costs are not allowed in an R&D claim.

However, from April 2023, cloud-based computing costs such as AWS will be eligible for inclusion.

Other changes in April include:

  • Must submit claims digitally
  • Claims must include additional information
  • a named officer of the company supporting the claims 
  • Claims must include details of any associated agents


From 1 April 2023, new rules for R&D Tax Relief claims will also require organisations to submit a pre-notification of their claim to HMRC digitally, applying if a business:

  • is a new claimant; or
  • has not claimed in the last three financial periods.

The requirement to pre-notify HMRC will affect any business that conducts research and development if they are eligible to claim under either the R&D Expenditure Credit (RDEC) or the SME R&D relief schemes.

HM Treasury also launched an eight-week consultation on designing a single, simplified R&D tax relief scheme earlier this year, merging the existing RDEC and SME R&D relief which, if implemented, will go live from 1 April 2024. 

If you have a question or want to discuss how these R&D tax relief changes might affect your business, our tax team can help. Contact us here.