Budget 2013 Reaction and Analysis: Research & Development


A new ‘Above the Line’ tax credit will be introduced from 1 April 2013 for companies claiming R&D tax relief under the large company scheme.


Companies will be able to claim the tax credit for qualifying R&D expenditure incurred on or after 1 April 2013.  The credit will be given at the rate of 10% of qualifying R&D spend and  will be deducted from the normal corporation tax liability.


Companies with no corporation tax liability will receive a refund of the credit net of corporation tax. Initially the credit scheme will be optional but will become mandatory on 1 April 2016.


The ‘Above the Line’ scheme replaces the 130% super deduction that is currently given to large companies. SMEs will continue to be able to claim a 225% super deduction on R&D.