R&D Tax Rates

The rates for the three R&D Tax Credit Regimes

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:

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:

Who Can Claim SME Relief:

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