Your guide to Research and Development tax credits 2023
With the average company claiming in excess of £50,000, research and development tax credits can be a very valuable asset for companies. However, many eligible businesses fail to claim due to misconceptions of what research and development actually involves. Our tax experts summarise the scheme and its benefits for businesses in our R&D guide.
The term ‘R&D’ sparks images of employees wearing white coats conducting experiments in laboratories, and whilst such projects would likely qualify for research and development tax credits, so will a multitude of other projects in a wide range of industries.
Some examples of industries that may involve eligible R&D activity include:
- Manufacturing and engineering
- Food and beverage
- Software development
- Agriculture
- Consulting
- Medical
For a project to qualify for R&D tax relief purposes, it must seek to achieve an advance in overall knowledge or capability in a field of science or technology that could not be easily overcome by a competent professional in the field.
This could be anything from the development of a new process, a piece of machinery, or a piece of bespoke software, and should be innovative or attempt to overcome uncertainty that exists as part of the development process.
Download our R&D guide below for more detailed information on research and development tax credits, including changes that came into force following the Spring Budget 2023.
Download the PDF2023/24 Tax card – Key rates and allowances
Our 2023/24 tax card covers the key tax rates and allowances, as well as useful supplementary explanations, on personal, business, employment, property and capital taxes.
The information included in our 2023/24 tax card reflects changes announced by Jeremy Hunt in his Spring Budget, and is a useful point of reference throughout the tax year.
Download your copy below, or for more information about how our team can help guide you through the rates and allowances, the process of claiming them and advise on specific situations, get in touch.
Download the PDFSpring Budget 2023
On Wednesday 15th March, Chancellor Jeremy Hunt delivered his Spring Budget for 2023. Our tax experts outline some of the key changes announced.
The Chancellor of the Exchequer, Jeremy Hunt, unveiled his Spring Budget in the House of Commons on Wednesday 15th March, detailing the Government’s plan of action for the UK economy.
According to the Chancellor, the Government’s plans for growth announced in the Spring Budget are founded on four ‘E’ pillars: everywhere, enterprise, employment, and education.
What has been announced in the Spring Budget 2023?
Alongside a forecast of the British economy, a collection of tax changes and reliefs were announced in the Spring Budget, with a focus on business investment. Below, we provide a summary of the main announcements.
The UK economy and public finances
- The Office for Budget Responsibility (OBR) predicts the UK will avoid a technical recession in 2023, despite forecasting the economy to shrink by 0.2%. In addition, the inflation rate is predicted to fall to 2.9% by the end of 2023.
- The UK debt is forecasted to be 92.4% of GDP this year, with it being predicted to rise to 93.7% in 2024.
Investment Zones
- The Government has launched a refocused Investment Zones initiative, offering tax reliefs and £80m government funding over the next five years to 12 new investment zones. These clusters for growth will be spread across the UK including regions such as the West Midlands, Greater Manchester, South Yorkshire, West Yorkshire, East Midlands, Teesside, the Northeast and Liverpool.
Corporation Tax
- As previously planned, the main rate of corporation tax is confirmed to increase from 19% to 25% for businesses with taxable profits over £250,000. Companies with profits between £50,000 and £250,000 will be required to pay a corporation tax rate between 19% and 25% from April 2023.
- From 1 April 2023 until 31 March 2026, a ‘full expensing’ 100% First Year Allowance will be introduced, allowing businesses to deduct the full cost of qualifying main rate plant and machinery investment from that year’s taxable profits. For qualifying special rate expenditure, a 50% First Year Allowances can be claimed instead.
- To promote investment into innovation, small and medium sized businesses that spend 40% of their expenditure on research and development (R&D) will benefit from an enhanced payable tax credit from 1 April 2023. This will be at 14.5% compared to the new 10% for other payable tax credits also coming into effect from 1 April 2023. Qualifying businesses will benefit from a return of £27 for every £100 spent on R&D.
- The exclusion of overseas expenditure for R&D claims is being delayed until 1 April 2024. This is to tie in with a decision on a single R&D scheme which will be announced at a future fiscal event.
- Until 2025, tax reliefs for theatres, orchestras, and museums and galleries will remain at the current rates of 45% to 50% to help support the cultural and creative industries.
Pensions
- The annual allowance for pensions tax charges will increase from £40,000 to £60,000 from 6 April 2023.
- The adjusted income threshold for the tapering of the annual allowance will be increased from £240,000 to £260,000, while the minimum Tapered Annual Allowance (TAA) and Money Purchase Annual Allowance (MPAA) will be increased from £4,000 to £10,000.
- The Lifetime Allowance, currently set at £1.07m, will be abolished.
If you would like further information on the key changes announced in the Spring Budget 2023 or require tailored advice on how these new policies will impact your business, contact us today to discuss your needs with one of our specialist tax team.
Download the PDF2022/23 Year-End Tax Planning Guide
In all things tax, time is of the essence. Checking that your personal affairs, your family and business affairs, and your plans for the long term are arranged as tax efficiently as possible is essential before the end of the tax year on 5 April 2023.
This year, such a review may be even more beneficial than usual. Major change to tax bands and allowances has been announced over the course of 2022. This means some last-chance opportunities to make use of allowances at current rates and to access current tax bands. Similarly, there may be areas where you have discretion over the timing of income and it is worth establishing whether income is better taken this year or next. Here again, a review before 5 April 2023 could have a significant effect on your tax position. For Scottish taxpayers, for whom higher and top tax rates are set to increase as well, there is even more to think about.
As your accountants, we have the all-round vision of your circumstances that can really help make an impact. To make the tax rules work to your advantage, it’s best to start the discussion as soon as possible before 5 April 2023. We look forward to being of assistance.
Inside this guide
In this briefing, we use the rates and allowances for 2022/23. Please note that throughout this publication, the term spouse includes a registered civil partner. Inside this guide:
- Planning potential for director-shareholders
- Income tax rates and allowances
- Tax and your family
- Savings and investments
- Capital gains tax
- Gift Aid
Our tax team help a multitude of clients navigate the complexities of personal and corporate tax, and work to establish an effective strategy that minimises tax liability. If you would like to seek more advice, please speak to your usual PKF Smith Cooper contact or get in touch with our expert team here.
The purpose of this guide is to provide technical and generic guidance and should not be interpreted as personal recommendation or advice.
Download the PDFCorporate Finance Annual Deals Review 2022
It has been another award-winning year for the PKFSC corporate finance division, being crowned ‘SME Advisory Team of the Year’ at Insider Dealmakers’ Awards in September 22. This demonstrates another great year of dealmaking for the team, with deal activity in the Midlands continuing to show resilience against the economic and political uncertainty.
At a glance
During our first full calendar year of membership within the PKF network, the Midlands Corporate Finance team completed 29 deals worth £346.8m. This includes five cross-border deals, demonstrating our global reach and access to international purchasers.
Since our last annual deals review was released, Tom Joy and Josh Gurton have been promoted to Senior Manager and Senior Executive, respectively, reflecting their contribution to a number of successful deals in Birmingham. In Derby, we have also welcomed Jasbir Mangat, Executive. The success and expansion of our team shows our ambition for further growth and we continue to recruit across all offices.
In 2022, we advised on a high proportion of sell-side opportunities, the increased demand to sell being matched by large corporations and investors having dry powder to deploy.
Inside this publication
Take a look at our Annual Deals Review 2022 on the button below. Included in this publication:
- Reflection on 2022 and outlook for the year ahead
- About PKF corporate finance in the UK & Ireland
- About PKF Smith Cooper corporate finance, our services and sectors
- Highlighted deals
- Our 2022 deal summary
If you’d like further information regarding the contents of this document, please get in touch with our team or find out more about how we can help you and your business here.
Download the PDFCharity News – Autumn 2022
Our Charity News includes the latest guidance and support available for the not-for-profit sector as COVID-19 restrictions come to an end and trustees start planning for the future.
We also consider the impact of recent legislative, reporting and tax developments and other pertinent issues, giving you the inside track on the sector’s current hot topics and latest guidance.
The newsletter is applicable to the whole of the United Kingdom and makes reference to the three UK charity regulators:
- The Charity Commission for Northern Ireland (CCNI)
- The Office of the Scottish Charity Regulator (OSCR)
- The Charity Commission for England and Wales (CCEW)
At PKF Smith Cooper, we focus on developing strong and trusting relationships with our clients, becoming a trusted adviser. Read our Charity News below or find out more about the specialist services we offer within the charities and not-for-profit sector.
Deal Dispatch – Issue 40
Welcome to issue 40 of Deal Dispatch, our corporate finance division’s regular deal round-up.
It has been yet another intense year of dealmaking across the Midlands in 2022. Whilst the national picture may look bleak with a 14% drop in deal activity, the Midlands remained resilient, recording just 4% fallback from last year’s record high. In fact, Midlands deal volumes for the last 2 quarters have out-performed the prior year’s quarters, with Q2 up 13% and Q3 22%
ahead.
At PKF we continue to see good levels of dealflow and new prospects, partly fuelled by shareholders’ fear of a change to capital gains tax rates (“CGT”). This is both over concerns of an increase in the next budget or through a change of Government in 2024. A CGT rate increase of 10%-20% will have a material impact on a shareholders net realisation which can only really be offset by increasing profits by 10-20% to compensate, with many thinking this is unlikely to happen in a
challenging economic environment. This is causing many shareholders to consider crystallising value in 2023.
Appetite for acquisitions remains strong, from both strategic trade purchasers and private equity players keen to create synergies and economies of scale, which can offset margin pressures and create growth in shareholder value. Whilst valuations from private equity appear to be softening given the increased economic uncertainty and rising cost of capital, strategic trade acquirers appear to be holding valuations, at least for the time being.
However, history shows us that private equity make high returns on investments made in times of economic uncertainty and tend to outbid trade acquirers. They remain keen to partner with management teams and shareholders to take advantage of market conditions, and drive significant growth and value for those involved, meaning there are ‘deals to be done’.
If you would like to discuss your growth or exit plans please do get in touch. We at PKF wish you a very merry Christmas, and look forward to supporting you in what we hope will be a terrific New Year for you.
Download the PDFAutumn Statement 2022
The Chancellor laid out three core priorities of stability, growth and public services.
The government sought a balanced path to support the economy and return to growth, partially through public spending restraint and partially through tax rises.
Download our publication for a comprehensive overview of the announcements made in the Autumn Statement that could impact your business and/or personal finances.
If you have any questions regarding any of the topics mentioned in the Autumn Statement, or would like further clarity regarding how the changes might affect you, please do not hesitate to get in touch with a member of our dedicated team.
Download the PDFMini Budget 2022
The week leading up to Chancellor Kwasi Kwarteng’s ‘Mini Budget’ may have been a short one due to the Queen’s funeral but the new government managed to fill it with a stream of policy announcements.
Before Mr Kwarteng stood up to make his statement on ‘The Growth Plan’ much of what he had to say about energy support for businesses and households, bankers’ bonuses, investment zones and reversals to NICs had already been announced. The government also said that the Chancellor’s statement would not be subject to a forecast from the Office for Budget Responsibility. However, this did not stop the media from dubbing this event a Mini Budget.
The Growth Plan set out a new approach to the economy built around three central priorities:
- reforming the supply-side of the economy
- maintaining a responsible approach to public finances
- cutting taxes to boost growth.
Download our publication for a comprehensive overview of the announcements made in the Mini Budget that could impact your business and/or personal finances.
If you have any questions regarding any of the topics mentioned in the Mini Budget, or would like further clarity regarding how the changes might affect you, please do not hesitate to get in touch with a member of our dedicated team.
Download the PDF