The UK R&D tax credit scheme is a government initiative that aims to incentivise innovation and technological advancement by providing tax relief to businesses that invest in research and development. The scheme has been in place since 2000 and has undergone several revisions since then. 

Under the current scheme, eligible businesses can claim a tax credit of their R&D expenditure, which can be used to offset against their corporation tax liability or, for smaller companies, as a cash payment. To be eligible for the scheme, a business must be a UK company subject to corporation tax, and the R&D activity must be aimed at achieving a scientific or technological advancement that is not readily deducible by a competent professional in the field. 

The R&D tax credit scheme is available to businesses of all sizes and across all industries. However, the level of relief that a business can claim depends on its size and the type of R&D activities it is engaged in.

The scheme has been successful in incentivising R&D investment in the UK, with thousands of businesses taking advantage of the tax relief on offer. In 2019-20, over 62,000 claims were made, resulting in £5.3 billion of tax relief for businesses. 

The UK government announced changes to the rates of R&D tax relief in the Autumn Statement in November 2022. These changes affect current R&D tax relief claimants under both the SME and R&D expenditure credit (RDEC) regimes, and they apply to expenditure incurred on or after April 1, 2023. 

To summarize these changes: SME repayable credit claimants will see a significant reduction in funding, whereas profitable SME claimants will see a smaller reduction in the net benefit of R&D claims. 

It should also be noted that RDEC claimants will see a net increase in funding (both profitable and loss making). While this benefits large businesses, it also benefits SME claimants who work on subcontracted R&D projects and those who receive other types of grant funding. 

In conclusion, the UK R&D tax credit scheme is a valuable tool for businesses looking to invest in research and development. By providing tax relief to eligible businesses, the scheme incentivises innovation and technological advancement, driving growth and competitiveness across all industries. The government’s continued commitment to R&D investment is an important step towards securing the UK’s position as a global leader in innovation and technology.