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Covid-19 spotlights research and development (R&D). Funding initiatives like the Fast Start Competition, managed by Innovate UK, have recently been available for break-through projects in science and technology. Companies involved in R&D may also be eligible for support such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Future Fund. But how do these measures fit in the context of the R&D tax incentives available for companies generally?
There are two main types of R&D tax relief, with availability largely dependent on the size of the company. Small and medium sized enterprise (SME) R&D relief provides an enhanced 230% deduction from taxable profits for qualifying R&D expenditure. Where an R&D claim creates a loss, it may be possible to surrender this for a cash repayment, currently 14.5%, a valuable boost to cash flow in current circumstances. Research and Development Expenditure Credit (RDEC) is another valuable relief, available both to large companies, and SMEs not meeting the criteria for the SME R&D scheme. It is now worth 13% of qualifying R&D expenditure.
Covid-19 creates a number of issues for R&D claims:
Please do contact us for advice on the complexities of R&D.