Research & Development Tax Credit - History

Over the 14 years that the UK R&D Tax Credit scheme has existed there have been a number of changes (primarily improvements), we catalogue the major changes below.

• Introduction of a Cap regarding the maximum Payable R&D Tax Credit

  Anticipated 1st April 2021

  A measure to combat Fraudulent SME R&D claims will limit Payable R&D Tax Credit claims to £20,000 plus three times PAYE & NI generated by the business.

• RDEC percentage

  1st April 2020

  Increased from 12% to 13%

• RDEC percentage

  1st January 2018

  Increased from 11% to 12%

• RDEC percentage

  1st April 2015

  Increased from 10% to 11%

• Rates of R&D relief

  1st April 2015

  The relief for SMEs increased from 225 per cent to 230 per cent.

• Payable R&D Tax Credit percentage increased

  1st April 2014

  The rate used to calculate the value of the R&D Tax Credit payable to SME loss makers was increased from 11% to 14.5%.

• An optional "Above the Line" expenditure credit for large companies was introduced

  1st April 2013

  Companies can now choose to claim either the existing large company scheme benefit or opt to receive the new Research and Development Expenditure Credit (RDEC) until April 2016 when the RDEC will replace the existing Large Company Scheme. The RDEC will enable Loss making Large companies to receive cash from the scheme rather than just carrying forward losses. The initial RDEC percentage was 10%.

• Sub-contractors with Service Company’s

  1st April 2012

  The disqualification of costs of sub-contractors provided by Agencies, where the sub-contractor had their own Service Company was removed.

• Payable R&D Tax Credits

  1st April 2012

  The need for company’s to have paid National Insurance or Income Tax to receive a Payable R&D Tax Credit was removed.

• Minimum R&D spend to qualify

  1st April 2012

  The £10,000 minimum spend per annum on R&D to qualify was abolished.

• Rates of R&D relief

  1st April 2012

  The relief for SMEs increased from 200 per cent to 225 per cent.

• Rates of R&D relief

  1st April 2011

  The relief for SMEs increased from 175 per cent to 200 per cent.

• Staff Costs - Qualifying Indirect Activities

  During 2010 the rules regarding Qualifying Indirect Activities were clarified. For example the manager of an R&D unit can claim for the time spent interviewing candidates to work on an R&D project.

• SME Scheme - Intellectual Property

  From the 9th December 2009 it will no longer be a requirement for the SME to own the IPR of an R&D project. This change tidies up an anomaly between the SME and large company schemes.

• Cap on R&D aid

  1st August 2008

  The Finance Act 2008 introduces a cap of €7.5 million on the total amount of SME R&D aid a company can receive in respect of a particular R&D project.

• Companies in difficulty

  1st August 2008

  The Finance Act 2008 introduces new rules which prevent ‘companies in difficulty’ from claiming SME R&D tax relief under the SME R&D tax scheme. A company will be regarded as being 'in difficulty' if its latest published accounts are not produced on a going concern basis. A company will also be prevented from claiming relief if it’s going concern status is based on the expectation of it receiving SME R&D relief or tax credits. If a company ceases to be a going concern after making a claim for SME R&D relief it will be treated as if the claim had not been made and the company will receive no tax relief or tax credit payments.

• Extension of SME R&D relief to larger companies

  1st August 2008

  The definition of an SME for UK R&D tax relief purposes; doubles from 250 employees, 50 million euros turnover or 43 million euros balance sheet 500 persons, 100 million euros and 86 million euros respectively.

• Rates of R&D relief

  1st August 2008

  The relief for SMEs increased from 150 per cent to 175 per cent.

• Rates of R&D relief

  1st April 2008

  The relief for large companies increased from 125 per cent to 130 per cent.