A company incurring qualifying research and development (R&D) expenditure from 1 April 2015 can claim a deduction equal to 230% of the relevant costs incurred in calculating its taxable total profits. This document discusses the rules in detail, together with the cap on R&D aid; R&D tax credit; the outcome of 2015 consultation process; and the detail on the advance assurance for small companies.
A company incurring qualifying R&D expenditure from 1 April 2015 can claim a deduction equal to 230% of the relevant costs incurred in calculating its taxable total profits. This was increased from 225% for expendi-ture incurred between 1 April 2012 and 31 March 2015, and from 200% for expenditure incurred prior to 1 April 2012 (lower rates applied earlier still, but these are now outside the scope of this note). CTA 2009, s 1044(8)
Note that where the company also qualifies to claim one of the creative sector reliefs (such as television tax relief and video games relief) it must choose between R&D relief and the creative sector reliefs. It cannot claim both in respect of the same expenditure. See the Television production and animation tax relief - key provisions and Video games tax relief - key provisions guidance notes for more on these other reliefs.
The deduction is given by allowing a further 130% (as above, lower amounts applied for expenditure incurred before 1 April 2015) of the qualifying R&D expenditure, in addition to the usual 100% deduction for such qualifying expenditure, in arriving at the adjusted profits for tax purposes.