Consultation outcome

Above the line credit for Research and Development

This consultation was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This consultation has concluded

Download the full outcome

Detail of outcome

The document includes a summary of the responses received and sets out decisions on the ATL credit’s design which have been made as a result of the consultation

Original consultation

This consultation ran from to


Seeking views on ATL credit that is effective at enhancing UK Research and Development R&D investment.


Consultation description

At Budget 2012, the Government announced that the credit would be taxable, paid at a minimum headline rate of 9.1 per cent, and be payable to companies with no corporation tax liability. A consultation on the Above the line (ATL) credit’s detailed design and implementation was then published on 31 March 2012.

This consultation set out the Government’s aim for an ATL credit that is effective at enhancing UK Research and Development R&D investment, affordable, simple and straightforward to administer, sustainable and not open to abuse, accountable ‘above the’ line under UK and International Accounting Standards, and compliant with European Union State aid rules.

The Government has also published draft legislation on the ATL credit, together with draft Explanatory Notes and a Technical Note. Technical consultation on the draft legislation and accompanying documents will close on 06 February 2013. Full details on how to contribute to the consultation are set out in the response to consultation document.

Design of the ATL credit

The ATL credit is designed to increase the visibility and certainty of R&D relief, and provide greater financial and cash flow support to companies with no corporation tax liability. The Government believes that the ATL credit will make R&D relief more effective at influencing large company investment decisions and help to increase the overall level of R&D activity in the UK.

Following consultation, the Government has decided that the ATL credit will be:

  • a taxable credit paid at a headline rate of 9.1 per cent
  • fully payable, net of tax, to companies with no corporation tax liability
  • available for qualifying expenditure incurred on or after 1 April 2013
  • introduced alongside the existing super-deduction in April 2013 and will replace the super-deduction in April 2016
  • paid at a higher headline rate to companies in the oil and gas ring-fence, to preserve the effective rate of relief they receive from a 130 percent super-deduction
  • available to surrender to group companies
  • safeguarded from abuse through the introduction of a Pay As You Earn (PAYE)/National Insurance Contribution (NIC) cap on the payment of the credit to companies with no corporation tax liability.

The Government believes that in the long-run, a mandatory ATL credit will allow for a simple system of R&D relief that provides the strongest incentive for domestic and foreign firms investing in R&D in the UK. However, the Government recognises that some companies may need to time to adjust to claiming R&D relief ‘above the line’ and will therefore retain the existing super-deduction until April 2016 to allow businesses time to prepare for the transition.

These changes follow recent reforms to improve the R&D tax credit for small business, and to make the SME scheme significantly more generous. The Government will not be moving the existing SME R&D tax credit to an ATL credit and the level of support under the small business scheme will not alter as a result of these changes.