Navigate the transformative landscape of Research and Development (R&D) tax relief and discover how these changes directly impact your business. In this presentation, we dissected the Chancellor’s Autumn Statement, unveiling a merged scheme set to revolutionise the R&D tax regime. We delve into the details, including the timeline, contracted-out R&D, subsidised expenditure, and the pursuit of simplification. We showcase about how the adjustments to the SME Intensive Scheme directly support innovative businesses, offering a clearer path to relief. Check out this presentation to grasp the complexities, challenges, and potential benefits of the evolving R&D tax relief landscape, and how these changes will shape your business’s innovation strategy. About Leyton UK: Leyton is the UK’s largest R&D Tax Credits and innovation funding consultancy. Our specialist tax advisors help businesses maximise their R&D (research & development) and innovation claims while ensuring compliance with HMRC regulations. We simplify access to a wide range of government financial incentives, including R&D Tax Credits, R&D Allowances, Capital Allowances, Energy Tax Reliefs, Patent Box, Land Remediation Relief and Creative Industries Tax Reliefs. We match every client with highly qualified sector-specific specialists and financial R&D tax consultants to unlock the full relief available. We work with over 6,000 innovative companies throughout the UK, with offices based in London, Manchester, Bristol, Edinburgh and Glasgow. https://leyton.com/uk/ Write to us at: uk@leyton.com

1. REVOLUTIONISING R&D
TAX RELIEF: A CRUCIAL
UPDATE FOR YOUR
BUSINESS
ROBERT STRUTT – DIRECTOR
JENNIFER WOO – ASSOCIATE DIRECTOR
SARAH ANDERSON – PARTNERSHIPS MANAGER
JAN 2024

2. 2
AGENDA
1 BACKGROUND
2 3
5
R&D INTENSIVE SCHEME
4 6 Q&A
MERGED SCHEME
TIMELINES
AUTUMN STATEMENT

3. BAKCGROUND
UK RDTC introduced in 2000
2000
March 2021 Consultation suggested
merging SME/RDEC schemes as a
possibility
2021
Autumn Statement 2022 announced
changes to relief rates
2022
Spring Budget 2023 announced
higher/more favourable RDTC rate
under SME scheme would remain for
R&D intensive, loss making companies
2023
Draft legislation published in July
2023 with proposal for a merged
scheme for R&D spend incurred on
or after 1st April 2024
2023
Autumn Statement 2023 confirmed
merged R&D tax relief scheme to take
effect for Accounting Periods from 1st
April 2024
2023

4. 4
4
AUTUMN STATEMENT
Autumn Statement 2023
Merged Scheme R&D Intensive Scheme Removal of
Nominations &
Assignments
Closure of R&D Regime
Review
APs beginning on or After 1
April 2024
40% intensity threshold
effective 1 April 2023
Effective 1 April 2024,
claimants cannot nominate
3rd party payees for R&D
tax credits, subject to very
limited exceptions
R&D regime review now
closed
Support provided as an
expenditure credit
30% intensity threshold
effective 1 April 2024
No new assignments of
R&D tax credits possible
effective 22 November
2023
Further action may be
required to tackle non-
compliance
To run alongside enhanced
support for R&D intensive
SME lossmakers
Grace period for SMEs that
dip below intensity
threshold for a year
Commitment to further
development of enhanced
support for R&D intensive
SMEs
Identical approach to
subcontracting in both
schemes
Identical approach to
PAYE/NIC cap
Overseas restrictions
Removal of subsidised
expenditure rules from
SME scheme

5. 5
MERGED SCHEME –
WHY?
1) DRIVE
INVESTMENT
IN THE UK
ECONOMY
3) MAKE IT
HARDER TO
FRAUD &
MAKE IT
EASIER FOR
VALID R&D
CLAIMANTS
2) DELIVER
VALUE FOR
THE
TAXPAYER
4) SIMPLIFY
THE R&D
TAX RELIEF
SYSTEM

6. 6
THE
SCHEMES
COMPARED –
FOR EVERY £
SPENT ON
R&D
SME SCHEME RDEC SCHEME MERGED SCHEME
Up to 31/03/2023 From 01/04/2023 Up to 31/03/2023 From 01/04/2023
APs starting on or after
01/04/2024
Profitable
company
130% additional
deduction rate
(24.7% net benefit)
86% additional deduction
rate (21.5% net benefit)
Gross RDEC rate
13% (10.5% net
benefit)
Gross RDEC rate
20% (15% to 16.2%*
net benefit)
Gross RDEC rate 20%
(15% or 16.2%* net
benefit)
Loss making
company
14.5% tax credit rate
(33.4% net benefit)
10% tax credit rate (18.6%
net benefit)
10.5% net benefit 15% net benefit 16.2% net benefit
Loss making
R&D intensive
company
14.5% tax credit rate
(26.97% net benefit)

7. 7
MERGED SCHEME
KEY CHANGES:
SUBCONTRACTE
D R&D
EXPENDITURE
Subcontracted R&D costs can be claimed by all businesses with
no 65% restrictions if intended at the time of contractual
agreement with the third party
Subcontracted R&D costs no longer restricted to qualifying
bodies
Subcontractors can claim RDTC:
if client did not ‘intend or contemplate’ contracting out the
R&D
any in-house R&D irrespective of contractual obligation
client is an overseas customer or gov. body with no taxable
trade in UK
Group companies can jointly enter an election for the one
carrying out the R&D to claim relief

8. 8
MERGED SCHEME
KEY CHANGES:
EXTERNALLY
PROVIDED
WORKERS &
PAYE NIC CAP
Restricted to UK workers only & must be paid via PAYE
will hit businesses who outsource development costs
overseas
costs paid to skilled professionals engaged via PSCs could
be restricted to salaries taken
PAYE/NIC cap on RDTC under SME scheme > RDEC
scheme
confirmed SME scheme rules to be adopted

9. 9
R&D INTENSIVE
SCHEME FOR
SMES
It was announced loss making SMEs whose R&D spend > 40%
total expenditure = R&D intensive company
Costs incurred on or after 1st April 2023  continue
claiming under current SME tax credit scheme i.e. 27p for
every £1 spent
Now confirmed R&D intensity threshold reduced to 30% for
APs commencing on/after 1st April 2024
Introduction of 1 year grace period if R&D intensity dips
below 30%

10. 10
10
TIMELINES
⁄ Timelines for Introduction of Measures
Expenditure
incurred on or
after
APs beginning
on or after
Claims
submitted on
or after
Effecitve
Claims
submitted on
or after
APs beginning
on or after
1 April 2023 1 April 2023 8 August 2023 22 Nov 2023 1 April 2024 1 April 2024
Rate reforms to
SME & RDEC
schemes
Inclusion of data
& cloud
computing costs
Requirement to
supply Addt’l
Information
Form (AIF)
No new
assignments of
R&D tax credits
Nominations
disregarded
SME/RDEC
schemes cease
Enhanced
support for R&D
intensives
Pre-notification
requirement
Merged Scheme
begins
Seeking an
advance in pure
maths eligibility
Overseas
restrictions come
into effect
Threshold for
R&D intensive
SMEs lowered to
30%

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