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Closed consultation: Preventing abuse of the R&D tax relief for SMEs

Hm Treasury

March 19
12:23 2020

Detail of feedback received

Research and Development (R&D) tax reliefs, including the small or medium sized enterprise (SME) scheme, support businesses to invest and are a core part of the governments support for innovation. To prevent abuse of the SME scheme, Budget 2018 announced that the amount of payable tax credit a qualifying loss-making business can receive would be capped at three times the companys total PAYE and NICs liability for that year.

As announced at Budget 2020, the government is now publishing a summary of responses to the 2019 consultation.

Budget 2020 also announced the introduction of the cap would be delayed until 1 April 2021, in order to consult on changes to the design of the measure.

Summary

This is a consultation on the measure announced at Budget 2018. This consultation will focus on how the cap will be applied, to minimise any impact on genuine businesses.

This consultation ran from
to

Consultation description

Research and Development (R&D) tax reliefs, including the small or medium sized enterprise (SME) scheme, support businesses to invest and are a core part of the governments support for innovation. To help prevent abuse of the SME scheme, Budget 2018 announced that the amount of payable tax credit that a qualifying loss-making business can receive through the relief in any one accounting period will be capped. The cap will be three times the companys total PAYE and NICs liability for that year and will be implemented from April 2020.

The government is consulting on how the cap will be applied, so as to minimise any impact on genuine businesses, before it is legislated in Finance Bill 2019-20. The government welcomes responses and input from businesses and their representatives currently using or planning to use the payable tax credit.

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