Research & Development (R&D) tax relief

Research & Development (R&D) tax relief

R&D tax relief is one of the most generous forms of Government funding available to businesses in the UK. R&D can only be claimed where a company has undertaken an R&D project that meets the required threshold for scientific or technological innovation.

In this video we detail recent developments in R&D, the requirements for making a claim and upcoming changes.  

R&D tax relief regimes

R&D tax relief is aimed at innovative companies across all business sectors. There are two R&D tax relief regimes in the UK: 

• SME R&D tax relief: aimed at small and medium-sized enterprises, SME relief can offer a loss-making business a cash payment of £18.60 for every £100 spent on qualifying R&D (increasing to £26.97 for every £100 spent for ‘R&D intensive’ SMEs), and profit-making businesses relief of up to £21.50 for every £100 spent.

• R&D Expenditure Credit (RDEC): aimed at large enterprises, RDEC relief provides enterprises with a headline rate of relief equal to 20% of its qualifying R&D expenditure. This credit is taxable so the overall benefit (net of between 19% - 25% Corporation Tax) is approximately £15 for every £100 of qualifying expenditure incurred. If the company has no tax liability it can seek payment of the post-tax credit in cash.

Qualifying R&D expenditure 

The primary types of expenditure that can qualify for R&D relief include:

• Staffing costs
• Subcontracted R&D
• Externally provided workers
• Consumable and transformable materials
• Software, data licences and cloud computing services
• Payments to clinical trial volunteers

Find out more

If you'd like any further information on R&D tax relief please read our guide.

How we can help

Since R&D tax relief was introduced in 2000, we have helped hundreds of clients across a wide range of industry sectors make successful claims for relief. We have a proven track record of assisting a broad range of clients – from start-ups to FTSE-listed groups – in preparing robust, supportable R&D claims with detailed accompanying reports.

For further information on other incentives we’ve explored, please visit the following pages:

• The Patent Box 
• Other innovation incentives