Research & Development (R&D) Corporation Tax credit
Overview
Expenditure incurred by a company on Research and Development (R&D) activities may qualify for either the:
- R&D Tax Credit
- or
- R&D Corporation Tax Credit.
Both are calculated at 25% of qualifying expenditure. For accounting periods commencing on or after 1 January 2024, the rate has increased to 30%.
Subject to meeting certain conditions, a company may elect to claim the R&D Tax Credit or the R&D Corporation Tax Credit during a transitional period. In general, the transitional period applies in respect of accounting periods ending between 31 December 2022 and 30 December 2023.
A company may elect to accelerate repayable credits due in respect of an R&D Tax Credit claim made in accounting periods commencing before 1 January 2022. A claim to accelerate the payments may be made in a specified return for an accounting period commencing on, or after, 1 January 2022.
A claim for the R&D Corporation Tax Credit is required to be made in respect of accounting periods commencing on, or after, 1 January 2023. The R&D Corporation Tax Credit will be repaid in three annual instalments.
The R&D Corporation Tax Credit is not offset against the company’s Corporation Tax (CT) liabilities. The company must elect to have the instalment treated as an overpayment, for offset against tax liabilities, or repaid.
Next: Qualifying criteria