Book your free R&D tax credit Consultation with Capti

The UK Government recognises that encouraging innovation is a vital component in a strategy for improving the UK’s productivity, performance and competitiveness. As a result, the research and development (R&D) incentives for both small and medium size enterprises (SMEs) and large companies have been enhanced in recent years to encourage and reward greater innovation in the UK. More information on how Capti Innovate UK Smart Grant writers (R&D tax credit consultation) can help your business apply for these incentives work is detailed below.


What this means for small companies


A simpler way for small businesses to apply for R&D Tax Credits.


The R&D tax credits available to small and medium enterprises (SMEs) have been substantially increased over recent years. The super-deduction available has increased to 230% from 1 April 2015 with the cash back available to loss making SMEs now 33.35% of the qualifying expenditure, Capti Innovate UK Smart Grant writers Can help you apply for R&D Tax credits.


The rise in the rate of relief for SMEs means that the cash value of claims for tax paying companies is £26 for every £100 of R&D spend from April 2015 (based on a 20% tax rate) and £33.35 for companies with losses.


These changes have made claiming R&D credits a lot more valuable to SMEs. Our Nifty R&D tax credits tool reduces the time and cost of SMEs claiming R&D credits.


What this means for large companies


HM Revenue & Customs (HMRC) have made the large company regime much more generous by introducing the Research and Development Expenditure Credit (RDEC).


RDEC allows larger companies from 1 April 2013 to recognise the benefit of their R&D claim effectively as a grant against cost, opposed to within the tax line, which helps add visibility. Loss makers are now also able to claim cash back from HMRC.


From 1 January 2018, the credit rate increased to 12% (from 11%), providing a net cash benefit of 9.72% at a 19% tax rate. Unlike the ‘old’ superdeduction scheme, which only had a cash value if the company was paying corporation tax; RDEC is payable regardless of the tax position, subject to some restrictions including a cap based on PAYE and NI.


Up until 1 April 2016 you had the option to continue claiming under the previous super-deduction R&D scheme, instead of the new RDEC. The old scheme works by providing an additional 30% super-deduction for tax purposes on qualifying R&D expenditure. £10m of qualifying R&D spend would result in an additional deduction of £3m, which at a 20% tax rate results in a £600k cash saving.


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