Single R&D tax relief scheme proposed

The government has set out proposals on how a single research and development (R&D) scheme - merging the existing R&D expenditure credit (RDEC) and the small and medium enterprise R&D relief - could be designed and implemented.

It is likely to be modelled on the RDEC scheme because this would provide certainty at an earlier point as to the exact cash value of tax credit making it potentially more attractive to investors. Under the current set-up those claiming SME tax relief can know with certainty the precise amount of money their firm will receive only at the end of accounting period.

In addition the UK is unusual in having two schemes so moving to a single measure would be a simplification. The aim is to have an above the line credit which removes boundaries between company size conducting R&D in the UK.

If...