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    •  

    Research & Development (R&D)

    R&D and other product tax reliefs
      2019-20 2018-19
    R&D Tax Credits, small & medium sized business (SME) scheme 230.0% 230.0%
    R&D SME Payable Credit 14.5% 14.5%
    R&D SME Expenditure Credit 12.0% 12.0%
    Patent Box 10.0% 10.0%
    Film Tax Relief 25.0% 25.0%
    High-end TV Tax Relief 25.0% 25.0%
    Video Games Tax Relief 25.0% 25.0%
    Open-ended Investment Companies and authorised Unit Trusts 20.0% 20.0%

    R&D Relief: Revenue costs

    The meaning of Research & Development (R&D) for these purposes and for the Capital Research & Development Allowance is set out in the BEIS Guidelines issued on 5 March 2004.

    Large Companies (i.e. those that are not SMEs) can make claims under the R&D Expenditure Credits (RDEC) regime. Under this regime, the benefit will be recorded as a taxable credit in operating profit and will be equal to 12% (2018-19 also 12%) of the qualifying expenditure.

    Non-tax paying large companies can receive a cash payout equal to the net value of the credit, subject to a cap based on the PAYE/NIC paid over to HMRC in respect of staff costs included in the R&D claim, and being a going concern, at the time the claim is made.

    Companies that are SMEs are entitled to an additional deduction of 130% of qualifying R&D expenditure. For non-tax paying SMEs a cash alternative of up to 33.35p for every pound of qualifying expenditure may be available depending on the current year tax losses.

    A cap limits the total amount of SME R&D a company can claim on each project to €7.5million (euro) and a going concern requirement applies.

    An SME for R&D purposes is a company which, together with certain related enterprises, meets the EU definitions but with higher limits such that it has fewer than 500 employees and either turnover not exceeding €100million (euro) or total assets not exceeding €86 million (euro).

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