What Types of R&D Relief Are There?

Gary Green
Gary Green
July 30, 2019

If your company is undertaking a project that is looking at innovating, improving, or developing a product, process, or service, you may qualify for R&D tax relief.

There are two different types of R&D relief which are generally dependant on the size of your company.

A company is usually defined as an SME if staff headcount is less than 500 and either turnover is less than €100m, or the balance sheet total is less than €86m.

There are also a number of further considerations that must be taken into account when determining if a company is defined as an SME such as group structures and whether grants are being received.

How Much Can I Save?

If an SME does not qualify the company can elect to claim using the less generous RDEC scheme.

Since 1 April 2015 SMEs can claim R&D tax credits of 230% on qualifying expenditure. This effectively means that for every £100 a company spends on qualifying R&D, they can deduct £230 from their profits when calculating profits chargeable to Corporation Tax.

The RDEC scheme (formally known as ‘Above-the-Line’) was introduced in April 2013 for large companies. Historically, companies could choose between the RDEC scheme or the Large Company scheme. The Large Company scheme was withdrawn from April 2016.

How Does It Work?

The way the relief is calculated is very different to that for SMEs. Large companies claim R&D Expenditure Credit (RDEC). The RDEC rate increased from 11% to 12% for expenditure incurred after 1 January 2018. The RDEC allows companies to claim an enhanced Corporation Tax deduction or payable credit on qualifying R&D costs.

The SME scheme offers more generous reliefs. However, SMEs can elect to claim relief under the RDEC scheme if they are unable to claim relief under the SME scheme because of a grant or subsidy under State Aid, or because they are carrying out subcontracted R&D.

For loss-making companies using either the SME or RDEC schemes, the tax credit is fully payable (subject to certain restrictions).

We are experienced in helping clients make claims for R&D tax relief. If you would like to discuss your available options, please get in touch.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
Contact Form Demo (#1)
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
July 11, 2024
HMRC Voluntary Disclosure – An Overview

Most people would agree that when it comes to dealing with their finances, they should be...

July 4, 2024
What Is A Partnership Tax Investigation?

In cases where HMRC decides that they will start an investigation into a Partnership Tax Return,...

June 27, 2024
Enquiries Into Employment Status

In some cases, employers find it in their best interests to have somebody work as a...

June 20, 2024
An Overview Of The DDS (Digital Disclosure Service)

If you want to disclose gains or income that you have not reported to HMRC, you...

June 13, 2024
Credit Card Sales Campaign

Originally set up in 2014, HMRC’s Credit Card Sales Campaign was aimed at individuals and businesses...

June 6, 2024
Advice Regarding Tax Litigation

The term “litigation” is used to refer to a tax dispute’s resolution when a statutory appeal...

May 30, 2024
Let Property Campaign

HMRC has looked closely into tax compliance among UK property investors and UK landlords since 2013...

May 23, 2024
What Is A Residence & Domicile Enquiry?

Questions regarding domicile and residence have significant effects on taxes that are payable and due in...

May 16, 2024
Company Tax Investigations By HMRC

If HMRC decides to carry out an investigation into a company’s tax returns, it is important...

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
Newsletter Form (#2)
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2022 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram