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) |