Changes to R&D tax relief regime creates inconsistences for businesses

New draft legislation to change the research and development (R&D) tax relief regime will come into effect for accounting periods beginning or after 1 April 2023 (see tinyurl.com/govranddref). The changes will create marked inconsistencies between businesses that report on their accounts over different time periods allowing some but not all businesses to claim certain reliefs up until that time as illustrated in the infographic below.

In the example ‘Company A’ represents companies with a December year end. The proposed changes will first have an impact in their accounting period beginning on 1 January 2024. In contrast its competitor ‘Company B’ refers to companies with a March year end. For these companies the changes will have an immediate impact on 1 April 2023.

The different year ends mean that Company A will be able to claim for certain overseas costs...