This is a freeview 'At a glance' guide to Research and Development (R&D) relief.
What is Research and Development (R&D) relief? How to claim R&D relief? How does small company R&D relief work? Can individuals claim R&D relief?
Subscribers, click here for your detailed version of this guide.
Qualifying expenditure on Research and Development (R&D) attracts four different forms of tax relief for Corporation Tax.
- The Small or Medium-sized Enterprise (SME) R&D Credits Scheme.
- The Large Company Scheme: R&D Expenditure Credit (RDEC).
- The Patent Box.
Additionally, there are R&D capital allowances.
R&D information on this site is split into freeview guides, guides for subscribers of www.rossmartin.co.uk and our premium content R&D Zone.
At a glance
At a glance
This guide focuses on relief for SMEs, noting that the large company scheme applies to SMEs in certain circumstances (see R&D Tax Relief: Overview ).
Click here for Patent Box.
R&D relief is given in two different ways, by enhanced deduction or by payable credit.
The amount of relief given depends on when the R&D expenditure was incurred:
Relief |
From 1 April 2020 | From 1 Jan 2018 | From 1 April 2015 | From 1 April 2014 | From 1 April 2013 |
1 April 2011 to 31 March 2012 |
Enhanced deduction rate |
230% | 230% |
230% |
225% |
225% |
200% |
Payable credit* |
14.5% | 14.5% |
14.5% |
14.5% |
11% |
12.5% |
Above the line expenditure credit (RDEC) |
13% | 12% |
11% |
10% |
9.1% |
* The payable credit is subject to a cap from 1 April 2021.
In order to claim relief, a company must have been engaged in qualifying R&D activity and then satisfy a number of specific conditions.
- The company must be a going concern.
- Any single R&D project must not receive Total aid of more than €7.5m.
Special rules and conditions
- There are special rules if a company has received state aid in respect of the project.
- Expenditure is not generally available if it has been subsidised.
- There are special rules for contracting and Sub-contracting R&D.
- See R&D subscriber guide for details of how to make claims.
To claim relief:
- An R&D report should be submitted along with the company tax return as part of the tax computation.
- It is helpful if the principal activities statement to the accounts states that R&D work is part of the company’s business activities.
Until 31 March 2012, the company must have incurred a minimum of £10,000 of qualifying expenditure on R&D projects. This requirement is removed from 1 April 2012.
Vaccines - restriction
The deduction available under Vaccine Research Relief for SMEs was removed from 1 April 2012 and the relief was completely abolished by Finance Act 2016 with effect from 1 April 2017.
Recent changes
PAYE Cap on payable credits
Finance Act 2021 introduces a cap on any claims for payable credits from 1 April 2021.
- There is a threshold of £20,000 under which the cap will not apply.
- The cap is the threshold amount plus three times the company’s total PAYE and National Insurance Contributions (NICs) liability for that year.
- An exemption for genuine R&D businesses.
- See R&D: SME Tax Credit scheme
Are you enjoying our content?
Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.
Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.
Enjoying the Practical Tax content on www.rossmartin.co.uk?
Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.