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Provide additional information of R&D claims from 1 August 2023

The latest Finance Act includes two changes that will affect all R&D claims:
(1) a requirement to provide additional information before an R&D claim is made; and
(2) a requirement for certain companies to make a claim notification within six months after the end of the accounting period for which they want to claim R&D relief.
When a limited company intends to make a claim for research and development (R&D) tax relief, from 8 August 2023 onwards it will need to provide detailed information to HMRC in advance. We can assist you in preparing the notification or prepare it on your behalf.

You will need to set out details of the R&D project(s) undertaken, including, in particular, the scientific or technical uncertainty that the work was seeking to overcome, along with details of the work done to resolve that uncertainty.

For accounting periods beginning on or after 1 April 2023, there is also a new R&D claim notification form which must be submitted within the ‘claim notification period’, which ends six months after the end of the accounting period for which the company wants to claim R&D relief.

Broadly, new claimants or those who haven’t claimed for three years will need to complete this claim notification form for accounting periods beginning on or after 1 April 2023.

RUMOURS OF THE ABOLITION OF INHERITANCE TAX

There are rumours circulating in the press of the possible abolition of inheritance tax (IHT) in a bid by the Government to secure the support of wavering Conservative voters. This may cause some individuals to delay IHT planning, but remember these are just rumours, and it may not be actually happen.

It should be noted that under the current IHT rules there are a number of generous reliefs and exemptions that would apply, as opposed to speculation of possible future changes. For example, business property relief is available on the transfer of shares in an unquoted trading company during lifetime or on death, such that no IHT would be payable. However capital gains tax potentially applies to a lifetime transfer of shares, subject to a possible claim to hold over the gain.

So, the current rules allow tax planning to be undertaken with an element of certainty, as opposed to speculating about possible future changes. Please talk to us if you would like to discuss inheritance tax planning.

HMRC RAISE INTEREST RATES AGAIN AS BASE RATE INCREASES

HMRC interest rates are linked to the Bank of England base rate. Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

The latest increased the Bank of England base rate from 4.5% to 5% means that interest on late paid tax will increase to 7.5% for most taxes and the rate of repayment interest will increase to 4% if you overpay.

These changes came into effect on 11 July 2023.

For those companies required to pay their corporation tax by quarterly instalment payments the rate increased to 6% from 3 July 2023.

If you are late with your self-assessment payment on account for 2022/23 that was due on 31 July 2023 then you should pay as soon as possible to avoid incurring further interest charges. Note that there is a 5% surcharge added to any tax still outstanding at 28 August 2023 unless you have agreed a payment plan with HMRC.

DIARY OF MAIN TAX EVENTS

AUGUST/ SEPTEMBER 2023

August Tax Table

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