Types of R&D Schemes

A. SME Scheme (Small and medium-sized enterprises)

Small and medium-sized enterprises (SMEs) may be eligible for a "super deduction" to reduce their taxable income or, if they incur a loss, a cash credit. A claim must be submitted within 2 years of the close of the accounting period to which it corresponds under this system.


You are a small or medium-sized enterprise if :

B. RDEC (Research and Development Expenditure Credit)

The Finance Act of 2013 set up the Research and Development Expenditure Credit (RDEC) system. It gives a tax credit that can be used to lower the amount of corporation tax owed or, if a company doesn't owe any corporation tax, it can be turned into cash. Under this system, a claim must be made within two years of the end of the financial period to which it refers.
Benefit Taxable credit worth 12% of eligible spending and 13% starting April 1, 2020.
Companies that have no CT responsibility will get a cash payment from RDEC. The due credit is limited to the company's PAYE/NIC liabilities for employees who worked in qualified activities during the accounting period.

C. RDA (Research and Development Allowances)

Companies can also get money back when they spend money on R&D-related capital expenses.

The plus side

The RDA plan lets you write off all your capital expenses in the year you paid for them. This can make a big difference in cash flow compared to other capital allowances, which give relief over much longer times (or when the right depreciation rules are used).

Important characteristics