United Kingdom

The R&D (Research…) Program in the UK is to encourage research and development in the UK that will lead to new or improved technologically advanced products or processes.

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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.
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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?