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The Large company scheme

For the purposes of the R&D tax relief scheme, any company that does not qualify as an SME may make a claim under the large company scheme. Under this scheme large companies benefit from a tax relief enhancement rate of 130%. This means that they may be able to deduct up to £30,000 from their taxable profits for every £100,000 spent on qualifying R&D.

As with the SME scheme, large companies are able to go back two years with an initial claim, and the costs include those incurred for staff, materials, subcontracting and utilities. The relevant rates and sample calculations are shown below.

 Rates

Period Uplift Super Deduction Surrender Rate
After Apr 1st 2008  30%        130%         N/A
2011 2012 2013 2014 2015
Corporation Tax Rates 26% 24% 23% 21% 20%

 

Corporation Tax reduction – sample calculation

R&D expenditure: £100,000

No Relief With Relief
Taxable trading profit £150,000 £150,000
R&D Uplift @ 30% £0 £30,000
Revised profit £150,000 £120,000
Corporation tax rate @ 23% £34,500 £27,600

Tax saving: £34,500 – £27,600 = £6,900