Generally,
SMEs claim R&D tax credits or R&D tax relief and
Large companies claim Research and Development Expenditure Credits (RDEC). However, SMEs may be eligible for RDEC if they cannot claim R&D tax credits or R&D tax relief under the SME regime.
SME R&D INCENTIVES BENEFIT
The Governments R&D incentives regime can be worth up to 33% of a SMEs R&D expenditure. However, the actual support will vary depending on whether you are profit-making or loss-making, and your Corporation Tax position.
PROFIT MAKING SMES
You can receive tax relief against your corporation tax liability equating to c. 25% of your qualifying R&D expenditure. That’s a reduction of £2,500 from your tax bill for every £10K you spend on R&D activities.
LOSS MAKING SMES
Are you a loss-making business with high R&D costs? You could be in line for up to 33% of your expenditure in the form of cash credit. That means you could receive over
£3.3k for every £10k you spend on R&D. Remember,
much more can be claimed as R&D than you might have expected. Check what relief you could be owed for your R&D with our tax credit calculator.
LARGE COMPANY RDEC BENEFIT
If you are a large company, or an SME unable to claim under the SME regime,you may be eligible to claim under the RDEC regime. This is a cash or tax benefit of almost 10% (after-tax) or
10p per £1. This means that for every £100k you spend on qualifying R&D expenditure, you can either receive a £10k tax reduction or if you are a loss-maker, receive this support as £10k of cash. Unlike the SME regime, the net benefit doesn’t change whether you are making a loss or making a profit. SMEs who cannot claim R&D tax credits due to having grant-funded projects may also be eligible to claim under the RDEC regime.
Find out how much your RDEC claim could be worth using our tax credit calculator today, or get in touch with us for more detail.
