Changes to Research and Development Expenditure Credit Article Image

Changes to Research and Development Expenditure Credit

Aspen Waite CEO Paul Waite gives us his thoughts on the recently announced changes to R&D Expenditure Credit - and what this means for small and medium businesses.

In the Autumn Statement the Chancellor announced a number of changes to the Research and Development Expenditure Credit (RDEC) and to the SME R&D relief.

  • the rates of relief will be increased;
  • there will be consultation on issues faced by smaller businesses;
  • the rules on consumable items incorporated in products that are sold will be tightened, ensuring the reliefs remain well targeted.

Increasing Rates

For expenditure on or after 1 April 2015,

  • for large companies the rate of the above-the-line RDEC will be increased from 10% to 11%; and,
  • the additional deduction under the SME scheme will be increased from 125% to 130% (total deduction increases from 225% to 230%)

Issues Faced by Smaller Businesses

The Autumn Statement announced;

  • advanced assurances for small companies making their first R&D claim under the SME scheme;
  • improvements to the R&D guidance; and,
  • a consultation in the New Year on the applications process for smaller businesses.

Ensuring the Reliefs Remain Well Targeted

From 1 April 2015, qualifying expenditure for all the R&D schemes will be restricted so that the cost of consumable items incorporated in products that are sold is ineligible. Draft legislation will be published on 10 December. The yield from this measure has been recycled to cover some of the costs of increasing the rates of the large company ‘above the line’ expenditure credit and of the SME scheme.


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