Research & Development Relief (R&D)

GLOSSARY

Research & Development Relief (R&D) definition

r瑟藞s蓽藧失 ænd d瑟藞v蓻l蓹pm蓹nt r瑟藞li藧f

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What does Research & Development Relief (R&D) mean?

Research and development relief in a nutshell鈥�

Expenditure on research and development is actively encouraged through the tax system as specific tax reliefs are offered for such expenditure. Companies and other trading businesses are able to claim 100% capital allowances (for capital expenditure on R&D). If the expenditure is revenue in nature, a 100% revenue deduction is available in the normal manner.

In addition, and for companies only, enhanced R&D reliefs are also available. The amount of relief differs depending on whether the company is a small or medium sized enterprise (SME) or a large company.

For an SMEs, an enhanced deduction is available for qualifying expenditure. Where the company has losses this can be surrendered for a tax credit.

Where the R&D is carried out by a large company (and in some circumstances an SME) relief is available as a taxable credit calculated as a percentage of the qualifying expenditure.

What is an SME?

A company is an SME if it has less than 500 staff and either turnover not exceeding

View the related Tax Guidance about Research & Development Relief (R&D)

Research and development (R&D) relief 鈥� overview

Research and development (R&D) relief 鈥� overviewThis guidance note provides an overview of the research and development (R&D) tax reliefs for companies.See the Research and development tax relief summary diagram which summarises the R&D tax relief.See also Simon鈥檚 Taxes D1.401.For a factsheet which summarises the R&D tax regime and which can be tailored for an advisor鈥檚 branded headings, see the Client factsheet 鈥� research and development relief.Types of R&D tax reliefExpenditure by a company on R&D can be relieved in the following ways:鈥or a trading company, revenue expenses are allowable as a deduction against the profits of the trade, and capital expenditure may be eligible for a 100% R&D allowance as detailed in R&D allowances in the Research and development tax relief 鈥� capital expenditure guidance note鈥n addition, qualifying expenditure on R&D is eligible for additional R&D tax relief. Significant changes have been made to the relief available with effect for accounting periods beginning on or after 1 April 2024. There continue to be two different types of relief: the R&D expenditure credit (RDEC) and a scheme which is now only available to certain loss-making SMEs. Before April 2024, the SME scheme was the default for SMEs (whether making profits or losses), which could claim RDEC only for specific expenditure which did not qualify under the SME schemeThe 2024 changes extend beyond the type of relief available to a company. See below under 鈥楻eforms to R&D reliefs from April 2024鈥� for a summary of the changes.R&D tax

Discover our 1 Tax Guidance on Research & Development Relief (R&D)

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