HMRC provides two types of R&D tax credit scheme to claim through. This guide explains which scheme you can apply for and the returns you can expect from each.
This scheme is designed to help smaller businesses with their research and development efforts.
To qualify an R&D tax relief claim under the SME scheme you’ll need to represent a company with 500 employees or less. Additionally, you’ll need to take in less than £100 million per year or have a balance sheet that doesn’t exceed £86 million. If your company is connected to any other businesses via partnerships, you might need to count the revenue and staff of your partners when calculating the size of your company. Ask your EmpowerRD advisor if this applies to you.
SME claimants receive between 18-33% of their R&D spend back.
Your SME credit will either be granted as a corporation tax reduction or a cash credit depending on your financial position. It is, therefore, a below-the-line benefit and not taxable income.
This scheme is designed to reward larger and some SME businesses for their research and development efforts.
RDEC is offered to companies that exceed the limits of the SME R&D relief scheme. Additionally, if you’re an SME who has received a grant or are subcontracted to a larger business for R&D work then this scheme may also apply to you. In fact, you may need to apply using both schemes. One of our advisors will be able to guide you through that calculation.
RDEC claimants receive up to 13% of their R&D spend back.
Unlike the SME scheme, the RDEC credit is taxable income, and therefore any credit you receive is subject to your firm’s corporation tax calculation. The advantage of that status is that it can appear on your income statement as profit-before-tax.
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EmpowerRD Covid-19 response
How we're helping businesses with their cash flow during the downturn.
Is my business eligible?
Find out if the activity undertaken by your business can qualify as R&D.
How much can I claim?
Read how different accounting positions can affect how much you're able to claim.
What evidence is required to make an R&D claim?
Learn about the different pieces of evidence required for different R&D costs.
The most common queries we hear about the R&D scheme.