Finance (No.2) Bill 2023: R&D Tax Credits Update

R&D Tax Credit Rate

As announced in the Budget, the Bill formally confirms the increase in the R&D tax credit rate from 25% to 30%. This should have the dual effect of maintaining the net benefit for large organisations (i.e. with group turnover above €750M), while also increasing the value of the credit for SME’s.

R&D Tax Credit Minimum Repayment Limit

The Bill formally legislates for the changes announced in the Budget wherein it will become possible to claim up to €50,000 as a first instalment repayment (as opposed to being capped at 50% of the credit value if lower), as opposed to the €25,000 first instalment threshold previously in place.

Pre-notification Requirement

Within the Bill, a new requirement has been set out which will be applicable to claimants who have not made an R&D tax credit claim in any of the previous three accounting periods prior to the period they plan to claim in. The details that will be required include:

  1. the name, address and tax number of the company,
  2. a description of the R&D activities,
  3. the number of employees involved in the R&D, and
  4. details of any relevant grant assistance received or to be received.

This pre-notification needs to be provided at least 90 days prior to submitting a claim, with similar pre-notification rules now applying to any claims on R&D buildings.

While the majority of companies already claiming R&D tax credits would typically maintain these details as part of a support package for their R&D tax credit claims, this is potentially a point of significant importance for companies that might be new to the regime. Where this is the case it will be important to ensure this pre-notification requirement is well understood and adhered to, particularly in respect of point 2, in order that the potentially lucrative 30% cash refund on R&D spend is not lost.

For more specific changes included in the Finance (No.2) Bill, read the following expert insights:

Request more information on available R&D Tax Credits