Corporation tax: Research and Development Tax Relief for large companies
Find out about Research and Development Tax Relief (R&D) schemes for large companies.
If your company is involved in research and development you may be able to claim R&D tax relief to reduce your company’s tax bill under the large company scheme or the R&D expenditure credit (RDEC) scheme.
The tax relief can only be claimed if your company is liable for Corporation Tax (CT).
There’s a separate scheme for small and medium sized companies.
Large company scheme
Amount of expenditure
There’s no current limit to the amount of qualifying costs that R&D tax relief can be claimed on. But for any accounting periods that ended up to 31 March 2012, the tax relief was only available if the company spent at least £10,000 a year on qualifying costs.
Rate of relief
The tax relief on allowable R&D costs is 130%.
So for every £100 of qualifying costs your company could have the income, on which CT is paid, reduced by an extra £30 on top of the £100 spent.
If there’s an allowable trading loss for the period, this can be increased by 30% of the qualifying R&D costs - £30 for each £100 spent. The loss can be carried forwards or back in the normal way.
Research and Development Expenditure Credit (RDEC) scheme
The RDEC scheme was introduced for expenditure incurred on or after 1 April 2013. It’s optional and runs alongside the Large Company enhanced-deduction scheme.
The RDEC scheme will replace the large company scheme in April 2016.
Rate of relief
From 1 April 2015 the tax relief is given at 11% on the amount of qualifying R&D expenditure.
If you’re a subcontractor, contracted to do the work on behalf of another company, you also may be able to claim R&D tax relief under the large company scheme.
Qualifying projects, costs etc
To help you decide if you can make a claim, read the detailed guidance about the types of projects that qualify for R&D relief, their associated qualifying costs, and how and when to claim etc.