The UK tax authority, His Majesty's Revenue and Customs (HMRC), has announced a consultation on draft guidance relating to changes to the research and development (R&D) tax reliefs, which will take effect from 1 April 2024.
The legislative changes follow a review of the R&D tax reliefs, which concluded in autumn 2023, when the Autumn Statement announced that the two R&D schemes would be merged.
Reforms have already been initiated to expand the scheme to cover data and cloud costs, to refocus support towards UK innovation, to target tax abuse and improve compliance. These changes and the overseas rules will apply from 1 April 2024.
As a precursor to these reforms, the new draft and updated guidance relates to:
- the restrictions on the extent to which R&D payments (contractor payments or payments to externally provided workers) can qualify for relief if the R&D activity takes place overseas; and
- the new rules for contracted-out R&D.
Full guidance on other changes is expected to be published later in 2024.