The UK government's research and development tax credit scheme is designed to stimulate innovation in the UK economy. The program provides UK businesses with either cash payments or corporation tax relief to compensate for qualifying R&D expenditures.
Whether you operate a large limited company or a brand-new startup, you can benefit from research and development tax relief if you've made eligible expenditures within the last year's accounting period.
HMRC offers two types of R&D tax relief based on the size of your company.
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.
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. One of our advisors will be able to guide you through that calculation.
RDEC claimants receive up to 12% of their R&D spend back