Summer Budget 2015: R&D tax credits – universities and charities

The research and development expenditure credit (‘RDEC’) was introduced for large companies in 2013 and was intended to make the benefits of R&D tax credits more visible for companies, even where they do not pay corporation tax. Small and medium sized companies continue to claim relief for qualifying R&D expenditure under the super-deduction scheme.

Even though universities and charities were never intended to be able to claim relief for R&D under the RDEC or under the previous large company scheme, HMRC have still received a number of claims from such bodies.

Legislation will be introduced to exclude universities and charities from relief under RDEC on expenditure incurred by such bodies on or after 1 August 2015. This change does not affect spin-out companies used by universities and charities to commercialise their research.

It was never the government’s intention that universities or charities should be able to claim relief for R&D expenditure (except where they use spin-out companies). This change puts the position back to what was intended when the RDEC was introduced. There is an opportunity for universities and charities to continue to claim this relief up to 31 July 2015.