What is R&D tax relief?

R&D is a Corporation Tax (CT) relief that rewards innovation through tax deductions, or in some circumstances, a cash refund.

The relief supports companies that work to ‘resolve scientific or technological uncertainties’. This is a broad definition that encompasses a range of innovative activities and can even be claimed on unsuccessful projects. The level of relief available depends upon which scheme the company uses.

SME Large company
Size Not more than £100m turnover or £86m gross assets and fewer than 500 staff. Most companies fall into this category. 500 staff or more and either more than £100 million turnover or £86 million gross assets.
Scheme name R&D tax relief for SMEs Research and Development expenditure credits (“RDEC”)
Claim value The R&D credit increases tax deductions to 230% on eligible costs. Loss making companies can claim a cash payment of 33% of this. The RDEC scheme credit is 13% of qualifying costs.  The credit is taxable, thereby creating a cash benefit of 11% (can offset a tax liability or generate a cash repayment)

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