R&D Tax Relief
R&D tax relief, since its introduction in April 2000, is arguably the most generous set of tax rules currently on the UK statute book
Where eligible for accounting periods beginning on or after 1 April 2024 R&D tax relief is claimed under the merged scheme R&D expense credit (RDEC) or where a company is R&D intensive the relief can be claimed under the enhanced R&D intensive support (ERIS).
The merged RDEC scheme can be claimed by companies who are trading, chargeable to corporation tax and have a project that meets the tax definition of R&D, which is based on the government (BIS) definition of R&D and is more onerous than normal product development. For expenditure under the merged scheme, the rate of R&D expenditure credit is 20%.
The ERIS scheme allows loss-making R&D intensive SMEs to deduct an extra 86% of their qualifying costs in calculating their adjusted trading loss, as well as the 100% deduction that already appears in the accounts and then claim a payable tax credit which is not liable to tax and is worth up to 14.5% of the surrender able loss. To be R&D intensive from 1 April 2024, its relevant R&D expenditure must be at least 30% of its total expenditure.
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- Staff salaries,
- Related employer’s NIC and pension contribution costs,
- Consumable stores,
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Sub-contract,
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Software,
- Data licenses,
- Cloud computing costs.
R&D begins when work to resolve the scientific or technological uncertainty starts, and ends when that uncertainty is resolved (or work to resolve it ceases). R&D ends when knowledge is codified in a form usable by a competent professional working in the field, or when a prototype or pilot plant with all the functional characteristics of the final process, material, device, product or service is produced.
As well as maximising their overall claim for this R&D tax relief, companies may need to plan activities in advance and amend their remuneration policy, to maximize and bring forward their overall claim.
Recent changes and useful case precedents 
New Submission rules delayed | Increase in R&D related enquiries | Quinn Case (RDEC v SME Relief) | Refund Cap | Digital Claims | Tackling Abuse | R&D Credits Explained | Take-up Report | Loophole Closed | HMRC Advance Assurance | Interaction with Patent Box Relief
R&D tax relief is claimed in the company tax return (form CT600), after, if required, making an advance notification submission and/or providing the additional information submission. Clients who are fearful that the R&D claim within their company is high risk and hence the tax return may be investigated by HM Revenue & Customs, through a corporation tax enquiry, may wish to consider taking out our Tax Fee Protection Service.
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For more information or advice on our R&D Tax Relief Services, contact your local Whitings LLP office today.
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