Research and Development (“R&D”) tax reliefs: Consultation
The Government has launched an open consultation on R&D tax reliefs. It will explore the nature of private-sector R&D investment in the UK, and how that is supported or otherwise influenced by the two current R&D relief schemes, the SME scheme (for small and medium sized enterprises) and the RDEC (research and development expenditure credit) scheme. The consultation closes on 2 June 2021 after which the responses will be considered to determine if and where changes may be appropriate.
In Budget 2020 it was announced that the Government would consult on whether expenditure on data and cloud computing should qualify for R&D tax relief. That consultation closed in October and a summary of responses has just been published today. The decision on whether data and cloud computing costs will be brought into the scope of qualifying expenditure will be taken alongside the wider 2021 review of R&D.
PAYE cap for Research and Development SME scheme
For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a business can receive in any one year will be capped at £20,000 plus three times the company’s total PAYE and NICs liability. This PAYE cap was going to be introduced from 6 April 2020 (with slightly different limits) but was deferred.
Enterprise Management Incentives (“EMI”): call for evidence
HMRC are seeking views on how the Enterprise Management Incentives (“EMI”) scheme is operating and whether it should be expanded. EMI is a tax advantaged HMRC approved scheme to incentivise management via company share options. The Government want to ensure that EMI provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, and will examine whether more companies should be able to access the scheme. Responses to the call for evidence should be made by 26 May 2021.
Enterprise Management Incentives: exception to working time requirements
Legislation was introduced in Finance Act 2020 to ensure that EMI participants were not forced to exercise their options earlier than planned because they no longer met the working time requirement due to being furloughed or having their working hours reduced as a result of COVID 19. Today’s measure extends this working time exception until April 2022 and ensures that affected individuals do not lose the tax advantages of their EMI options. Finance Bill 2021 will legislate to ensure that new EMI options issued by employers to employees who have not met the working time requirement as a result of coronavirus will be qualifying EMI options.
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