Quick answer: A straddling period is an accounting period that begins before and ends after a rule-change date, most significantly 1 April 2024, the start of the merged scheme. The claim is split so expenditure before the change date is assessed under the old rules and expenditure after it under the new rules, based on actual spend rather than time elapsed.
What is a straddling period?
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 substantial 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 does HMRC define a straddling period?
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.
What does a straddling period look like in practice?
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. See apportionment for the general principle HMRC applies, and time apportionment for how the equivalent split works for staff time.
Related terms
Frequently asked questions
A straddling period is an accounting period that begins before and ends after a date on which the R&D tax relief rules change, most significantly 1 April 2024, the start date of the merged scheme.
Expenditure incurred before the change date is assessed under the old rules, and expenditure incurred on or after the change date is assessed under the new rules. The split is based on actual expenditure incurred in each part of the period, not simply on the proportion of time elapsed.
A month-by-month cost schedule showing when expenditure was actually incurred supports the split between the two portions of the period, since the calculation must reflect actual spend rather than a simple time-based estimate.