Back to news list

Research and Development

Check with us to see if you qualify

Research and Development (R&D) Relief is a corporation tax relief that can reduce the company's tax bill or, in certain circumstances, generate a loss which may be surrendered in exchange for a refundable tax credit.

There are two schemes available with differing rates of relief, depending on the size of your business:

The Small & Medium-sized Enterprise (SME) Scheme

Under the SME scheme the tax relief on qualifying R&D expenditure is currently 225%, so, for every £100 spent £225 of relief is available.  If this enhanced R&D relief gives rise to a trading loss then it can be relieved against other profits.  Alternatively the loss can be surrendered in exchange for a refundable tax credit of 11%.

The Large Company Scheme

Tax relief on allowable R&D costs under the large company scheme is 130%.  However, there is no mechanism within the large company scheme to allow for the surrender of losses in exchange for a refundable tax credit.

Qualifying R&D Projects

R&D Relief is available if an R&D project ‘’seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty - and not simply an advance in its own state of knowledge or capability’’.

This is a very broad definition and can encompass a wide range of activities, including those which may not appear to be research and development. 

For example a factory which incurs costs developing improvements to its production line to increase productivity could potentially qualify for relief.

Qualifying R&D Costs

The main categories of qualifying costs are:

·                Employee costs (subject to time apportionment to reflect time spent of the relevant project).

·                Sub-contractors or agency staff costs.

·                Consumable or transformable materials used directly in carrying out R&D. 

·                Some utility bills.

·                Computer software used directly in the R&D.

Capital expenditure

Although R&D Relief is only available for revenue expenditure it is possible to claim 100% R&D capital allowances on the costs of plant & machinery which relates directly to the R&D project.

We Can Help You

At Rothmans we have extensive experience of R&D claims across a number of industries.  If you think that your business may qualify for relief please contact us.

Julian Sims




Research and Development Relief