R&D Tax Rates

The rates for the three R&D Tax Credit Regimes

The software underpinning RDRelief was sold to one of the big-4 professional service firms in 2018. Consequently, the brand is no longer in operation.

R&D Tax Advisors are invited to find out more about the Inspired.tax claim preparation software.
Otherwise, please feel free to continue to browse this website for useful information regarding claiming R&D Tax Credits in the UK. However, beware that none of the information has been updated since 2018.

Overview

There are three R&D Tax Credits regimes (SME, RDEC, RDA), each with different types of relief and varying levels of benefit.

The determination of which regime (or combination of regimes) a company will claim depends on a number of factors including the size of the company and whether your qualifying expenditure is capital or revenue in nature for tax purposes.

Rates for Three Regimes:

SME Rates

Small and Medium Enterprises

Main article: SME Regime Explained

Profit making companies

230% immediate deduction

An extra 130% deduction from annual profit (in addition to the normal 100% deduction)

Loss-making companies:

Up to 14.5% of the surrenderable loss

RDEC Rate

Research and Development Expenditure Credit

Main article: RDEC Explained

11% above the line credit

Standalone credit that is brought into account as a receipt in calculating profits

RDA Rate

Research and Development Allowances

Main article: RDA Explained

100% immediate deduction

Capital allowance

Changes to the R&D Tax Credit Rates:

Main article: History of the UK R&D Tax Credits

In line with the government's strategy to increase the amount of research and development that is undertaken by UK companies, the SME and RDEC rates have increased several times.

These rate changes include:

1 April 2015: RDEC rate increase from a rate of 10% to 11%
1 April 2015: SME rate increase from a rate of 225% to 230%
1 April 2013: Launch of RDEC at a 10% rate
1 April 2013: Launch of SME regime at a 150% rate

Who Can Claim SME Relief:

Main article: SME vs Large companies

SME companies who are undertaking projects that are revenue in nature for tax purposes (rather than capital in nature) and have:

Less than 500 staff
Turnover of under €100m or a balance sheet total under €86m (unfortunately HMRC defined the requirements in Euros, which adds complexity in some cases)

Including the figures of linked companies and partner companies.

Linked Companies

Main article: Linked Companies

Holds over 50% of the voting rights in another company
Another company holds over 50% of the voting rights in your company

Partner Companies

Main article: Partner Companies

Another company holds over 25% of voting rights or capital in your company
You hold over 25% of another company's voting rights or capital

Otherwise, companies will claim under the RDEC regime (for revenue expenditure) or the RDA regime (for capital expenditure).