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.

Access this article and thousands of others like it free for 7 days
with a trial of TolleyGuidance.

ACCESS THE FULL ARTICLE

Already a subscriber? Login

Request a Free Trial to TolleyGuidance to gain access to the full article

TolleyGuidance is produced by specialists within the field, our tax guidance materials provide actionable insights and practical guidance to support you day-to-day. We don’t just inform you about the latest changes in the tax world. We take the time to explain the implications and, most importantly, what actions you need to take for your clients.


A bit about you:

Please note that all fields marked with a * must be filled in
Salutation
First name*
Last name*
Company*
Job title*
Email*
Phone*
Postcode