Sarah Bradford looks at the expenditure cap on payable research and development tax credits for small and medium enterprises.
Legislation in Finance Bill 2021 places a cap on the amount of the payable research and development (R&D) tax credit that can be claimed by loss making small and medium sized enterprises (SMEs). The cap will apply for accounting periods beginning on or after 1 April 2021.
Prior to its introduction, the government consulted on proposals to prevent abuse of the relief. Legislation which will give statutory effect to the measure was published in draft in November 2020, together with an explanatory note and a policy paper. It is available on the Gov.uk website.
The relief
An element of relief is available for expenditure on research and development (R&D). The
