Definition
A straddling period is an accounting period that begins before and ends after a date on which the R&D tax relief rules change. The most significant current example is 1 April 2024, the start date of the merged scheme. For a straddling period, the claim is split so that expenditure incurred before the change date is assessed under the old rules and expenditure from the change date is assessed under the new rules. The split applies to actual expenditure, not simply to time elapsed.
How HMRC defines it
HMRC guidance on straddling periods is at CIRD81160 and at CIRD90110 for the merged scheme transition. Finance (No. 2) Act 2023 contains the commencement provisions at Schedule 1, paragraph 18, which set the apportionment principle. The 2024 AIF accommodates the split disclosure.
Practical example
A company with a 31 December 2024 year-end has a period that straddles 1 April 2024. Expenditure incurred from 1 January to 31 March 2024 is assessed under the old SME or RDEC rules, and expenditure from 1 April to 31 December 2024 is assessed under the merged scheme. The two slices require separate calculations, with a month-by-month cost schedule supporting the split.