R and D reliefs

Companies may be entitled to corporation tax relief in respect of qualifying expenditure that they incur on research and development (R&D). At Spring Budget 2021, a review of the R&D tax reliefs was launched, which concluded with the announcement at Autumn Statement 2023 of a merged R&D relief scheme. The review generated a period of change and transition for these reliefs.

For accounting periods beginning before 1 April 2024, the conditions that must be met, and the value and form of the R&D tax relief available, depend very significantly on whether a company is a small or medium-sized enterprise (an SME), or a large company, for these purposes.

For such accounting periods, R&D tax relief is available in the following forms (referred to below as the pre-1 April 2024 schemes):

1. •

   relief for SMEs by way of:

   1. ◦

      an enhanced deduction (186% of qualifying expenditure for expenditure incurred on or after 1 April 2023) in computing profits subject to corporation tax, or

   2. ◦

      a payable tax credit (10% of the enhanced deduction for expenditure incurred on or after 1 April 2023 or, for defined loss-making ‘R&D intensive’