Autumn Budget 2026: Innovation taxes
Today’s Budget announcements include a number of welcome measures aimed at simplifying the R&D tax relief administrative process for claimants. For a while, it has felt that businesses have been facing heavy compliance requirements in the aftermath of fraud and error identified in the R&D tax relief system.
For R&D claims made on or after 1 April 2027, businesses will no longer need to submit a Claim Notification Form (CNF) before making an R&D claim, removing an additional administrative step for many companies and one which could have prevented a business claiming the relief even when engaged in genuine qualifying R&D activity.
HMRC has also confirmed that it will simplify the Additional Information Form (AIF) from Autumn 2027, reducing duplication and providing greater clarity around contracting arrangements, externally provided workers, project descriptions and the Enhanced R&D Intensive Support (ERIS) intensity ratio. More broadly, HMRC has committed to reviewing the end-to-end claims process, increasing collaboration across government to make better use of R&D data and expertise.
The government has recognised that if it wants to encourage the UK to continue to be one of the world’s leading places to start innovative businesses, unnecessary compliance burdens need to be removed. In addition, we understand that the government is proposing to gather stakeholder views on how to simplify the R&D tax relief legislation to make rules easier to comply with. This feels a much more collaborative approach than businesses and advisers have been used to in more recent years and is interesting when new R&D legislation has not been in existence for that long (for accounting periods starting on or after 1 April 2024).
Much of this change may be to pave the way for some of the detail we have seen released in respect of the new founders relief with more technical consultation to follow. This is a new relief which at first glance, looks like a reinstatement of entrepreneur’s relief but it does go further than that through its interaction with R&D activity.
The relief is a 10% CGT rate for qualifying disposals by founders or early investors of high-growth, innovative companies, subject to a £10 million lifetime limit. To qualify, individuals must hold at least 25% of the company at the start of trading. The company must also meet minimum turnover and employment thresholds and satisfy two of three specified growth and innovation tests relating to turnover, headcount and R&D expenditure. Businesses looking to grow and scale can benefit at company level from R&D tax reliefs as well as at the founder level who has invested time, dedication and expertise to start and scale high growth innovative UK companies. However, there will be more to come on this.
Whilst the Budget 2026 included a number of welcome measures aimed at simplifying the administration of R&D tax relief, there were no substantive changes announced to the Patent Box regime. Given the government’s stated interest in supporting innovation and investment through simplification, Patent Box could become a topic for future consultation, but no changes have been announced at this stage.
