A history of R&D

Published by Sandra Smith on

An R&D tax credit claim can provide a cash support to businesses that are developing a new product, process or service. HMRC first introduced the scheme in 2000 in an effort to reward innovation and to encourage business growth.

When first launched the minimum spend on eligible R&D was £25,000 per accounting year. In 2002, the R&D tax relief for large companies was introduced along with a reduction of corporation tax from 20% to 19%. We have detailed the key changes around R&D tax credits below:

2003

The minimum spend on eligible R&D in an accounting period for SME’s and larger companies is reduced from £25,000 to £10,000. The staff costs element is simplified along with the ability to include external workers.

2004

The definition of staffing costs is changed and expenditure on consumable items and computer software is classified as expenditure.

2005

New rules are brought in on claiming for intangible assets. A clearer definition of SME’s is announced.

2007

Small companies see Corporation Tax change to 20%.

2008

SME and large company scheme rates are improved, there is an increase of Corporation Tax for SMEs to 21% however the main Corporation Tax rate is reduced from 30% to 28%. The time limit for making an R&D claim is reduced from six years to two years (after the end of an accounting period).

2009

Qualifying indirect activities are allowed to be included in R&D claims. The intellectual property condition for SME’s is removed.

2011

Corporation tax is reduced, the main rate is reduced to 26% and for SMEs to 20% and online filing is now mandatory. The SME scheme rates are also improved.

2012

The PAYE and NIC liabilities cap are removed along with the minimum expenditure level of £10,000. As the Government moves towards one rate of Corporation Tax for all UK companies, the main rate is decreased from 26% to 24%. The SME relief rate is also increased from 100% to 125%.

2013

The main Corporation Tax is decreased again to 23%. Research and Development Expenditure Credits (RDEC) are introduced to replace the previous large company scheme.

2014

The main Corporation Tax is decreased again to 21% and the SME payable credit rate is risen from 11% to 14.5%.

2015

The newly introduced RDEC rate is increased to 11%. The main Corporation Tax is merged with the small profits rate and reduced to 20%. The SME scheme rate is increased from 125% to 130%

2016

The large company super deduction scheme is abolished with most moving over to the RDEC.

2017

Corporation Tax is reduced to 19%.

2018

The RDEC rate is increased to 12%.

2019

RDEC claims can now be accessed online, CT600 and computation documents now need to be included. In order to avoid abuse of the R&D claims system.

2020

A roadmap for improving R&D development in the UK is published. The RDEC rate is increased to 13% and a de minimis threshold means that businesses with a payable credit of £20,000 or below will not need to worry about applying the cap.

2021

A new PAYE and NIC cap for SME’s payable credit is introduced. A temporary extension to carry back trading losses for Corporation Tax is announced (this will apply to company accounting periods 1st April 2020 to 31st March 2022).

R&D tax credits are a complex process, to ensure you are claiming your full entitlement get in touch here.







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