What is the R&D Program within the United Kingdom?

• Purpose – to encourage research and development in the UK that will lead to new or improved technologically advanced products or processes.
• How – by providing Corporation Tax relief that will reduce your company tax bill. In some cases, a company may receive a cash refund.
• Companies must be liable for Corporations Tax.

R&D Relief Schemes

• Relief is given as a taxable credit on the amount of qualifying R&D expenditures.

There are two schemes, depending on the size:

Small or Medium-sized Enterprise – SME scheme

• Fewer than 500 employees.
• Annual turnover not exceeding € 100 million.
• A balance sheet not exceeding € 86 million.
• In determining the above criteria, Association rules apply to companies that you own 25% or more, or that own 25% or more of your company.
• Company must be a going concern at all times.

Large Company Scheme

• Applies if your company does NOT meet the definition of a SME.
• Relief provided:
• Relief on allowable SR&ED costs is 130%. That is, for each £100 of qualifying costs, your company’s income on which Corporation Tax is paid, is reduced by an additional £30 on top of the £100 spent.
• Relief is NOT refundable.

R&D Projects – Defined

• “Project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.”
• Project must be related to your company or organization’s trade – either existing or intended start up.
• Must answer the following four questions:
  • What were the scientific or technological uncertainties?
  • How and when were the uncertainties actually overcome?
  • Why was the knowledge being sought not readily deductible by a competent professional?
  • What was the scientific or technological advance?