Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants
Jeremy Hunt–Chancellor of the Exchequer–presented his Spring Budget 2024 with a keen eye on the upcoming elections, easing the cost of living pressures, and boosting the economy with R&D incentives.
The UK 2024 Spring Budget (announced on the 6th of March) included measures aimed at supporting businesses, improving technology adoption as well as tax cuts ahead of the election, aligning with the government's “Budget for Long Term Growth” plans.
Jeremy Hunt–Chancellor of the Exchequer–presented his Spring Budget 2024 with a keen eye on the upcoming elections, easing the cost of living pressures, and boosting the economy with R&D incentives.
With tax cuts announced for National insurance contributions (a further 2% cut, following the 2% cut announced in the Autumn Statement), alcohol, fuel duty and child benefit charges, the majority of the Spring Budget has been designed to ease the tax burden, and support those hit hardest by the cost of living crisis.
These tax cuts are being paid for by a new vape levy, a rise in tobacco duty, and the extension of the UK’s tax on the profits of oil and gas companies until 2029.
The Spring Budget aims to stimulate the UK economy, address business concerns and provide tax relief. The OBR (Office for Budget Responsibility) believe that national debt will continue to fall, but while business investments have risen faster than predicted in the Autumn, the outlook for the British economy still remains sluggish.
For businesses and workers, specifically, the UK Spring Budget 2023 includes measures aimed at stimulating investment, increasing R&D and addressing workforce challenges:
Investment zones programme: The Chancellor has allocated £160 million to each of the six new investment zones across the Midlands and the North of England which will give businesses within these areas access to funding and tax reliefs–including enhanced rates of Capital Allowance, relief from Stamp Duty Land Tax and Employer National Insurance Contributions–to catalyse local growth and investment.
National insurance cuts: From the 6th of April, there will be a further 2% cut to National Insurance, on top of the previous 2% cut, announced in the Autumn Statement, bringing employee National Insurance contributions down to 8%. This will cost the UK government around £10 billion but will benefit employees, who will see a reduction in NI contributions paid on their earnings that will save them around £450 a year extra.
Increased VAT registration threshold: To reduce the administrative and financial burden of VAT (particularly for SMEs) the government is increasing the amount businesses can earn before paying VAT. Currently, businesses need to pay VAT when they earn £85,000 or over, but from the 6th of April, the VAT registration threshold will rise to £90,000.
100% capital allowances: Capital allowances let businesses deduct a percentage of the value of certain items (such as equipment, machinery, and certain business vehicles) from their profits, ultimately resulting in a lower tax bill. The government introduced ‘full expensing’ in the Autumn statement, which meant companies could deduct 100% of the total cost of these items, within the year they were acquired. The Spring budget announced that full expensing now also applies to leased items, not just purchased ones, which should save businesses around £10 billion each year in tax savings.
Fuel duty freeze: The Spring Budget announced that the temporary 5p cut in fuel duty–first introduced by RIshi Sunak in 2022–is here to stay until 2025, which should save businesses £50 per year in fuel costs.
Growth guarantee fund: The government is extending the post-pandemic ‘recovery loan’ scheme and has allocated £200 million–under a new scheme, called the ‘growth guarantee fund’--to help support the growth of SMEs who have a turnover of less than £45 million.
R&D tax relief changes: No new changes were announced for the R&D tax relief scheme, but the government is in the process of merging the existing SME R&D scheme with the RDEC scheme, from the 1st April 2024, to simplify the tax credit claiming process and to provide SMEs with a higher rate of payable tax credit.
Although there were no specific announcements made for the R&D tax credit initiative, the Chancellor did announce new tax breaks and initiatives that will help to establish the UK as a world leader in innovation.
A £360 million package will support R&D across the life sciences, automotive and aerospace sectors, with a further £45 million allocated to accelerate medical research–into diseases like cancer, dementia and epilepsy–and an expected £100 million to boost innovation within the AI industry.
Plus, in line with net-zero goals, the Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage.
The UK’s creative industry will also benefit from £1 billion worth of new tax reliefs over several years. This will see eligible film studios receiving a 40% tax relief from business rates until 2034, a new ‘Independent Film Tax Credit’ for independent British films with a budget of less than £15 million, and an ‘Audio-Visual Expenditure Credit’ to lower the cost of producing visual effects in high-end TV and film.
These initiatives reflect the UK government's commitment to supporting UK-based innovation and creativity.
For SMEs and businesses engaged in R&D, understanding what’s available to them and making sure they’re fully prepared for the administrative requirements is crucial to maximising the benefits of the tax relief available.
If you'd like to discuss this update or anything mentioned in this article, simply contact us on 0207 118 6045 or use our contact page.
Whether you need full support from start to finish or simply have a quick question, we’re here to help.
HMRC has lost a case against a company they claimed was not entitled to research and development (R&D) Tax Credits.
We sat down with one of our resident Corporate Tax Associates for R&D tax claims to discuss where clients are most likely to slip up when calculating their R&D expenditure and the tax relief they are owed.
Discover how to optimise your R&D tax relief claims by avoiding common mistakes. Learn best practices for SMEs and large enterprises to stay HMRC compliant.
Please contact us to discuss how working with Myriad can maximise and secure R&D funding opportunities for your business.
Contact us
hello@myriadassociates.com