R&D tax relief & Incentives

Research and Development (R&D) tax relief includes a range of Government sponsored incentives in the form of corporation tax relief. This may take the form of an additional deduction of qualifying expenditure for SMEs, which may result in a payable tax credit, a corporation tax reduction or repayment of tax, and an R&D Expenditure Credit (RDEC) for large companies, or an R&D allowance (any company).

The R&D tax relief, RDEC and R&D Allowance (RDA) claims are submitted with your Company corporation tax return. A Company may be eligible to claim for the last two completed accounting periods. That is, an R&D claim may be submitted up to two years after the end of an accounting period.

To file an R&D tax relief claim, an Additional Information Form (AIF) alongside the Company tax return is required, and HMRC has defined the nature of information that must be submitted in the AIF supporting documentation. Knight will assist the Company through all stages of the claim preparation and submission process.

Small and Medium Enterprises (SMEs)

SMEs from all sectors may make claims for R&D tax relief so long as they have undertaken projects in a field of science or technology and meet the qualifying criteria. The SME regime is generous and can result in material benefits as tax savings or credits.

Additional deduction of 130% for a total enhanced deduction of 230% (from 1 April 2015) and an additional deduction of 86% for a total enhanced deduction of 186% (from 1 April 2023).

Loss making SMEs may claim a payable credit up to 33.35% of qualifying expenditure (from 1 April 2015) and a payable credit up to 18.6% of qualifying expenditure (from 1 April 2023).

Profit making SMEs may claim a tax saving up to 24.7% of qualifying expenditure (from 1 April 2015) and a tax saving up to 21.5% of qualifying expenditure (from 1 April 2023).

R&D Expenditure Credit (RDEC) for large companies

Like the SME regime, large companies from all sectors may potentially make a claim and receive an expenditure credit either as cash or reduction in tax payments.

RDEC is accounted for above the line as income and amounts to 13% (from 1 April 2020) and 20% (from 1 April 2023) of qualifying expenditure.

As the RDEC is recognised as income, having a positive impact on EBITDA, RDEC is subject to Corporation Tax at the applicable rate of tax in the period of claim.

Research and Development Allowances (RDA)

If you have incurred capital expenditure to facilitate R&D, the RDA regime provides an increased Capital Allowance on items that may not already be included in other available Capital Allowances. This regime is available to both SME and large companies.

Receive a 100% deduction in the year for capital expenditure incurred facilitating R&D.

Get in touch

Contact us to arrange an initial no obligation consultation to understand how Knight can assist you.