Glossary · UK
What is R&D Tax Relief?
A Corporation Tax incentive that rewards UK companies for qualifying research and development spending.
Full Definition
R&D Tax Relief reduces a company Corporation Tax (or pays a cash credit) for spending on qualifying research and development that seeks an advance in science or technology. From 1 April 2024 most companies use the merged RDEC scheme: a 20% above-the-line credit which, because it is taxable, gives a net benefit of roughly 15% of qualifying spend after Corporation Tax. R&D-intensive loss-making SMEs (where qualifying R&D is at least 30% of total expenditure) can instead claim an enhanced deduction with a 14.5% payable credit. Claims are made in the Company Tax Return and need supporting technical and cost records.
How R&D Tax Relief is calculated
Merged scheme: Gross credit = Qualifying spend x 20%
Net benefit (after 25% CT) = Qualifying spend x 20% x (1 - 0.25) = 15%- 20%
- Merged RDEC above-the-line credit rate (from 1 Apr 2024).
- 25%
- Main Corporation Tax rate applied to the taxable credit.
- Qualifying spend
- Eligible R&D costs (staff, consumables, subcontractors, etc.).
Worked example: On GBP 100,000 of qualifying R&D under the merged scheme: gross credit = GBP 20,000, net benefit after Corporation Tax = 20,000 x 0.75 = GBP 15,000.