A “super deduction” may be available for SMEs to mitigate their tax liabilities or, if loss- making, a cash credit may be available. Under this regime, a claim must be made within 2 years from the end of the accounting period to which it relates.
Benefits
130% additional tax deduction for qualifying technological expenditure resulting in reduced tax payable (up to 25% of qualifying expenditure)

Surrender of losses in return for payable tax credit (up to 33% of qualifying expenditure)

For accounting periods beginning on or after 1 April 2021, the payable R&D tax credit that a loss-making SME can receive will be capped at £20,000 plus three times the amount paid in respect of PAYE and Class 1 NIC liabilities. The cap therefore does not apply for companies whose payable credits is not more than £20,000. Companies are also exempt from the cap where the following two part test is met: the claimant company’s employees are creating, preparing to create or actively managing IP; and the spend on connected party resources does not exceed 15% of the company’s qualifying R&D expenditure for an accounting period.

SMEs will be able to claim under the RDEC scheme for large companies if they do R&D which is subcontracted to them or grant funded.

Is your business an SME?
The EU Definition of a Small or Medium Sized Enterprise (SME*) consists of the following

Learn more about the SME scheme and how we help companies in the Private Market and the start-up industry - 
Download our SME flyer

The Research and Development Expenditure Credit (RDEC) scheme was introduced in the Finance Act 2013. It provides a tax credit which can be used to reduce corporation tax payable or if a company has no corporation tax liability a cash credit can be claimed. Under this regime, a claim must be made within 2 years from the end of the accounting period to which it relates.

Benefit

Taxable credit at 12% of qualifying expenditure, and at 13% from 1 April 2020.

Companies with no CT liability will benefit from RDEC through a cash payment. The payable credit is limited to the company’s PAYE/NIC liabilities of the staff engaged in qualifying activities in the accounting period.

Who can claim?

Learn more about how the RDEC scheme works and examples of how we have assisted our clients - Download RDEC flyer

Companies can also benefit from expenditure where they incur capital expenditure associated with R&D.

Benefit
The RDA scheme provides a 100% deduction for capital expenditure in the year the costs were incurred. This can improve cash flow significantly compared with other capital allowances, which give relief over much longer periods (or applying the appropriate depreciation policies).

Key features
Available for both large companies and SMEs
Broad range of qualifying cost categories
Learn more about various other schemes available for capitalised expenditure from our dedicated capital allowances page.

Healthcare and Life Sciences

Industrial Products & Construction

Oil, Gas and Chemicals

Banking
Financial Services
Insurance
Fintech

TMT

Consumer Business
Automotive