Claim.
Reinvest.
Succeed.

What is it worth?

We are sure you want to understand the benefit available….the answer is “it depends” and there have been recent changes impacting how much a claim is worth. This is a little bit dry….but don’t give up just yet!

R&D Expenditure Credit (RDEC)

Under this regime for large companies, a taxable credit is claimed. The rate of the RDEC is 20% for expenditure from 1 April 2023 (previously 13%). If profit-making, the credit is used to discharge all or part of your corporation tax liability. If you have no corporation tax liability, you will benefit through a cash payment or reduction in tax or other duties.

SME regime

This regime provides for an additional deduction against taxable profits at 86% for expenditure incurred from 1 April 2023. With the corporation tax rate at 25%, this means the effective benefit for a tax-paying company is 21.5%. If you are loss-making, you can exchange losses for a payable credit (at a rate of 10%), if profitable you will see a reduction in your corporation tax liability. Note that loss-making R&D intensive SME’s (companies that spend at least 40% of their total expenditure on qualifying R&D) can access benefits of up to 27% as they are subject to different rules.

New RDEC, also referred to as the merged scheme

This scheme will become the primary arrangement for claims relating to accounting periods commencing on or after 1 April 2024. Under this regime a taxable credit (20% of qualifying expenditure) is claimed with the effective rate of relief up to 16.2%. If profit-making, the credit is used to discharge all or part of your corporation tax liability. If you have no corporation tax liability, you will benefit through a cash payment or reduction in tax or other duties.

Enhanced R&D Intensive Support Scheme (ERIS)

For accounting periods commencing on or after 1 April 2024 companies who are classified as SMEs and whose qualifying R&D expenditure is more than 30% of their total expenditure, and who are loss-making can potentially make an ERIS claim. This regime provides for an additional deduction at 86%, creating further losses which can be exchanged for a payable credit at a rate of 14.5%. When worked through, this means that benefits of up to 27% are available.