On 5 August 2022, UK HMRC published updated guidance on Research and Development tax relief for small and medium-sized enterprises and the Claim Research and Development (R&D) expenditure credit.

Research and Development tax relief for small and medium-sized enterprises

The SME tax relief allows companies to deduct an extra 130% of their qualifying costs from their yearly profit to make a total 230% deduction and to claim a tax credit if the company is loss-making, worth up to 14.5% of the surrenderable loss. The update includes new information in the 'How to claim R&D relief' and 'How to support your claim' sections, including what a taxpayer needs to complete before using the online service to send details to support their claim.

Claim Research and Development (R&D) expenditure credit

The R&D expenditure credit (RDEC) is calculated at 13% of a company's qualifying R&D expenditure and is taxable as trading income. It is primarily meant for large companies but may be claimed by SMEs in certain cases. The update includes new information on when the RDC can be claimed and clarifies what tax liabilities can be discharged with the credit.