Newsletter

SIC Code(s) - Check Yours if Claiming R&D Tax Credits

3 years ago • 2 min read

By Steve Livingston

❌ UK individuals pay a record £16.7 bn in CGT (but missed planning opp...)
🧐 SIC Code(s) - Check Yours if Claiming R&D Tax Credits
🤓 Your Executive Assistant (for those who hate typing - like me 🙈)

UK individuals pay a record £16.7 bn in CGT (but missed planning opp...)

Interesting article in the FT about the surge in UK individuals paying Capital Gains Tax (CGT) with a record £16.7bn collected for the tax year 2021-22.

There are a number of fairly obvious suspects including:

nervous business owners who exited early ahead of rumours of a harmonisation of CGT rates with income tax rates (that never actually transpired...ooops 😳);
disillusioned buy-to-let landlords who are fed up with the measly tax relief available on mortgage interest;
the decrease in Entrepreneur's Relief (confusingly now called 'Business Asset Disposal Relief') from £10m to £1m of lifetime gains.

But the article fails to pick up on some tax planning opportunities to help mitigate the CGT suffered.

This includes using SEIS reinvestment relief (= a complete elimination of 50% of a CGT gain) and/or EIS deferral relief (deferral, not a complete elimination but still a useful planning tool) that I explain further in this short video.

SIC Code(s) - Check Yours if Claiming R&D Tax Credits

It is worth noting that one of the first requests on the new Additional Information Form for R&D tax credit claims filed from 8 August 2023 is for the company's SIC code.

SIC codes are four-digit numerical representations of major businesses and industries and if you're not sure what yours currently is, you can check it here.

We have no official confirmation, but the suspicion is that HMRC might use this as a screening process to help 'unearth' claims from companies that might not typically be expected to carry out R&D within their industry (there's also suspicion that this might have been one of the tools or flags used in the recent flurry of tax enquiries into R&D claims).

So check your SIC code to ensure that it doesn't mislead from your core business (and potentially attract unwanted attention 🥸).