D1.420 R&D tax relief for SMEs

Corporate tax
Corporate tax | Commentary

D1.420 R&D tax relief for SMEs

Corporate tax | Commentary

R&D and SMEs—the reliefs

D1.420 R&D tax relief for SMEs

For the latest New Development, see ND.1350, ND.1918.

Where the company is an SME it may claim either:


    •     an enhanced revenue deduction of an additional 130% on qualifying R&D for the accounting period (see below)1


    •     a tax credit in respect of its surrenderable loss with a cash payment of 14.5% of the surrenderable loss, which is not available to carry forward (see 'SME R&D tax credit' below)2


    •     a tax credit for pre-trading expenditure (see D1.422)3


    •     R&D expenditure credit (RDEC) (see D1.435A) for work subcontracted to it by a large company or any person otherwise than in the course of carrying out a UK chargeable trade (see 'R&D subcontracted out to SMEs and large companies' in D1.414), subsidised expenditure (see D1.420A) and capped R&D expenditure (see 'Cap on SME R&D reliefs' in D1.402A)4

An SME cannot make a claim for an enhanced R&D deduction, a claim for pre-trading expenditure or an R&D tax credit at a time when the company is not a going concern (see 'Going concern and R&D tax relief' in D1.402A).

HMRC has published guidance on Research and Development tax relief for small and medium-sized enterprises.

Prior to IP completion day (defined as 11pm (GMT) on 31 December 20205), companies that received more than €500,000 a year from the relief had certain details published on the European Commission website6 as R&D relief constituted state aid for EU purposes.

Post IP completion day, with the end of the

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial