The government has released further details of the proposed changes to reliefs for expenditure on research and development:
“This measure increases the rate of tax credit for companies that carry out qualifying R&D and claim the RDEC. RDEC is primarily aimed at larger companies but is claimed by SMEs in some cases.
The RDEC is a standalone credit that is brought into account as a taxable receipt in calculating trading profits. The current general rate is set at 13% of qualifying R&D expenditure. This measure increases this rate from 13% to 20%.
This measure also reduces the rates in the R&D tax relief for SMEs.
The SME additional deduction rate will be reduced from 130% to 86%, and the rate of the SME payable credit rate which can be claimed for surrenderable losses will be decreased from 14.5% to 10%.”
Current law on the RDEC is contained in Chapter 6A of Part 3 of CTA 2009, Pt. 3, Ch. 6A. Current law on the R&D tax relief rates for SMEs is contained in Pt. 13, Ch. 2. Legislation to substitute the new rates will amend CTA 2009, sections 104M, 1044, 1045, 1055 and 1058.
Related content from Claritax Books
The UK’s special tax rules for Research and Development expenditure continue to offer valuable tax relief for companies.
This book explains how the scope of R&D relief is wider than is often imagined, whilst also showing the statutory conditions that must be met for a successful claim.