This will allow an extra 5,000 SMEs to qualify for R&D tax relief, the Chancellor said.

Rates for companies at a loss will be reduced from 25% to 19% and the thresholds will be reduced from 40% to 30% from 1 April 2024. HMRC calculates R&D intensity as the proportion of an SME’s qualifying R&D expenditure compared to its total spending.

Along with these changes a one-year grace period is being introduced for companies that dip below the 30% that guarantees companies relief for the next year.

The Autumn Statement Green Book confirmed that the profitable businesses credit rate will be reduced to 15% while loss makers will be penalised having to pay a 16.2% rate.