Research & Development (R&D) Tax Relief is a government-backed corporation tax incentive, aimed at stimulating innovation and development in UK industries. Investing in innovation is good not only for every business, but also for the UK economy as a whole.
To qualify, the company must be carrying out research and development work in the field of science or technology. The net benefit of R&D tax relief ranges from 9% to 33% of eligible expenditure, depending on the size of the company and whether a profit or loss has been made.
The SME Scheme
From 1 April 2015, the relief a company can get increased to 230% of their qualifying R&D costs. Loss-making companies can in certain circumstances surrender their losses in return for a payable tax credit.
Research and Development Expenditure Credit Scheme
From 1 April 2015, Research and Development Expenditure Credit (RDEC) was available at 11% of qualifying R&D expenditure. The RDEC rate increased to 12% for qualifying expenditure incurred on or after 1 January 2018. For loss making companies, the tax credit is fully payable (subject to certain restrictions).