Office building with gold reflection

Corporate Tax Roadmap: Continued reduction of error and fraud while incentivising innovation

Stuart Weekes, Partner, Innovation Taxes and Oli Clapp, Senior Manager, Innovation Taxes
06/02/2025
Office building with gold reflection
In line with Labour’s manifesto and additional pre-election publications, the headline announcement of the roadmap with regards to Research and Development (R&D) tax relief is that the rates of relief will remain unchanged. This will provide the necessary stability and clarity for claimants after years of significant changes to the R&D schemes and rates.

The roadmap commits to maintaining the rates for the merged R&D Expenditure Credit (RDEC) scheme and the Enhanced Support for R&D Intensive SMEs. RDEC claimants receive 15p for every £1 of qualifying spend, with R&D Intensive SMEs receiving up to 27p.

As stated in the report, “the R&D reliefs play a vital role in the government’s mission to boost economic growth” and it is estimated that the schemes will support £56 billion of business R&D expenditure a year by 2029/30. The scheme aims to drive innovation, attracting private investment that further stimulates growth in innovation.

With some EU countries currently giving higher rates of R&D relief than the UK, it is to be seen if the ‘generous rates’ being maintained will be enough to attract new business to the UK. However, providing claimants with certainty about future relief levels available to them, will boost companies’ confidence in the scheme, enabling longer-term business decisions and supporting the overall narrative by the government of prioritising stability.

Although the rate of relief will remain, it is noted in the roadmap that continued improvement to the scheme is still required. The government has highlighted three areas of focus - improving administration, reducing error and fraud, and continued evaluation. The improvements mentioned include:

Error and fraud reduction

Continued monitoring and further action, to ensure taxpayer money supports qualifying R&D. Prior action has reduced error and fraud levels by almost 10% from 2021-22 to 2023-24, but continued improvement will be undertaken to reduce this further.

Improving signposting and guidance on R&D reliefs

Aimed at improving knowledge of the scheme and reducing error and fraud.

R&D disclosure facility

Which was launched at the end of 2024. This facility allows companies to disclose mistakes or careless behaviour in making claims that are outside of the two-year period for re-submission and to tackle agents who breach the agent standards.

Advanced clearances consultation

The government will open a consultation on widening the use of advanced clearances in R&D reliefs in spring 2025. Advanced clearances offer companies greater certainty before making claims amid increased scrutiny and can reduce error and fraud.

Ongoing R&D relief evaluation

The government is committed to periodically evaluating the R&D reliefs to ensure they are effective and based on credible, up-to-date evidence.

The roadmap also addressed concerns raised about the increased scrutiny by HMRC, which paired with the improvements mentioned above, appear to aim towards a much for cooperative and fair approach to the R&D claim process, which would be widely welcomed.

Next steps

It remains important to ensure your R&D claims are robust, and your documentation aligns with HMRC's evolving expectations. Our specialist R&D team can assist with feasibility assessments, claim preparation and HMRC enquiry support. For further information, please contact Stuart Weekes, or your usual Crowe contact.

Contact us

Stuart Weekes
Stuart Weekes
Partner, Corporate Tax
Thames Valley

Insights

What will the government’s corporate tax roadmap consist of and how will it impact you?
What does the Corporate Tax Roadmap have in store for Capital Allowances?
What does the Corporate Tax Roadmap hold in store for Transfer Pricing?
What will the government’s corporate tax roadmap consist of and how will it impact you?
What does the Corporate Tax Roadmap have in store for Capital Allowances?
What does the Corporate Tax Roadmap hold in store for Transfer Pricing?