In the UK, there are currently two R&D tax relief schemes – SME (Small & Medium Enterprise) and RDEC (Research and Development Expenditure Credit).
Usually, the scheme a company claims under is determined by the company’s size in terms of headcount, turnover and balance sheet total. This calculation can get a bit tricky as any linked or partner enterprises must also be included, and sometimes other things must be taken into account such as certain grants.
It is possible for a company to claim for some of their costs under the SME scheme and some under the RDEC scheme.
The criteria for a qualifying R&D project is the same regardless of the scheme but the schemes do differ in terms of:
Costs related to subcontracted activities can be included in an SME claim but cannot in an RDEC claim.
The way in which the schemes generate a benefit for a company
The amount of benefit generated
The benefit of an SME claim can be up to 33% of the qualifying R&D spend.
The benefit of an RDEC claim is around 10% of the qualifying R&D spend.
If you have any questions on this blog or anything R&D related, please contact us at firstname.lastname@example.org.
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