Deloitte comments on Government plans for R&D tax credit regimes


The Treasury yesterday (Tues) published draft legislation which will affect both the Small and Medium-sized Enterprise (SME) and Large R&D regimes. The announcement comes following last week’s Autumn Statement during which the Chancellor outlined plans for an ‘above the line’ R&D tax credit regime which will be introduced for larger companies.

Richard Blackwell, Tax Partner at Deloitte in Cambridge, comments: “The R&D consultation process has lead to two very positive changes. Firstly, the Government announced last week that the R&D regime for larger companies will move to an ‘above the line’ credit which is hoped will encourage R&D activities in the UK.

“Secondly, draft legislation published today includes one significant change which will affect both the SME and Large R&D regimes. The strict contractual conditions that prevented many companies claiming the costs of temporary staff have been relaxed. This removes the requirement for the temporary staffing arrangement to only involve three parties: the claimant company, a staff provider and the individual. This welcome change will be effective from 1 April 2012 and enable many companies, both large and small, to increase the value of their R&D claims.”

In addition, the £10,000 R&D threshold and the PAYE/NIC cap which restricted the amount of R&D tax credit that loss making small and medium-sized enterprises (SMEs) could receive are removed by the draft legislation. Both of these measures had been announced in the 2011 Budget along with the increase in the SME rate to 125% for expenditure on or after 1 April 2012. The rate of payable credit will drop to 11% at the same date, so the effective rate of the R&D cash credit remains substantially unchanged.


The Deloitte Cambridge office comprises 8 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business, food and agribusiness.

Deloitte LLP