Benefitting from Innovation: R&D Tax Relief
For small and medium sized companies (“SME”s) with profits there is a “super” tax deduction. Until 1 April 2023 an SME spending £10,000 on eligible R&D could save tax of up to £2,470. This will be substantially reduced after 1 April 2023. Where the extra deduction creates or increases a tax loss it may be possible to surrender the loss and receive a cash repayment instead of up to £3,335 (£1,860 from 1 April 2023) for every £10,000 of qualifying expenditure.
The regime for larger companies is less generous, but nevertheless very worthwhile. Large companies (or members of large groups) can receive a taxable credit of 13% (20% from 1 April 2023) of qualifying expenditure under the R&D Expenditure Credit “RDEC” scheme.