What are R&D Tax Credits?

The Research and Development (R&D) Tax Credits schemes allow UK companies that carry out qualifying R&D related to their trade to claim a Corporation Tax reduction for certain qualifying expenditure. 

R&D Tax Credits can be claimed by UK registered companies liable to Corporation Tax, working in any field that seek to research or develop an advance in scientific or technological capability in their field. Eligible R&D costs are claimed to bring about a Corporation Tax reduction or cash repayment for a proportion of their R&D expenditure.  

What are the R&D Tax Credits Schemes?

HMRC currently offer R&D Tax Credits via two schemes depending on the size and structure of the business and whether the R&D was subsidised: 

SME Scheme – businesses are eligible for the SME R&D Tax Credits Scheme if they have less than 500 full-time employees and less than €100 million turnover or a balance sheet total of less than €86 million. 

RDEC Scheme – businesses are eligible for the RDEC (Research & Development Expenditure Credit) R&D Tax Credits Scheme – formally known as the large company scheme – if they, or the group of companies, have over 500 full-time employees, more than €100 million turnover or a balance sheet total of more than €86 million. 

There are also instances when SMEs can claim under the RDEC scheme, such as when the R&D is subsidised by a large company client business or a grant (such as a LEP or Innovate UK). 

How much is my R&D expenditure worth in R&D Tax Credits?

Depending on the size and status of your business, the proportion of your eligible R&D expenditure you claim back will differ: 

SME Scheme: 

  • If your company is loss-making, you can claim up to £33.40 for every £100 of eligible R&D expenditure. 
  • If your company is profit-making, you can claim £24.70 for every £100 of eligible R&D expenditure. 
  • If your company breaks even, you can claim a minimum of £18.90 for every £100 of eligible R&D expenditure. 

RDEC Scheme: 

Loss-making, break-even and profit-making businesses can claim £10.53 for every £100 of eligible R&D expenditure. 

The SME Scheme is notably more generous, but large businesses should not be discouraged from claiming as they tend to have more extensive projects and bigger outlays, resulting in substantial claims nevertheless. 

All values above are based on the current rates for : 

  • Corporation Tax @ 19% 
  • SME scheme enhanced expenditure rate at 130% 
  • RDEC rate @ 13%

Calculate your Tax Relief

Our quick, free and easy to use R&D Tax Credit Calculator will give you a ball-park figure on how much R&D Tax Relief you could receive from HMRC. This can be calculated for the current financial year and the 2 previous years. Enter some basic numbers and we’ll estimate what it could be worth. Go to calculator.

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