Corporation Tax Act 2009 section 112

Rates of relief

Section 112 applies transitional modifications to the R&D tax relief rates for expenditure incurred before 1 August 2008, reducing the enhanced deduction percentages and adjusting the tax credit rate compared with the rates that apply from that date onwards.

• For SME R&D relief on expenditure before 1 August 2008, the additional deduction is 50% (not 75%), giving a total deduction of 150% (not 175%) of qualifying spend
• The SME payable tax credit rate for pre-August 2008 expenditure is 16% of the surrenderable loss, rather than 14%
• For vaccine research relief (Chapter 7), the additional deduction for both SMEs and large companies is 50% (not 40%) for pre-August 2008 expenditure, with total deductions of 150% (not 140%)
• These transitional rates ensure that expenditure incurred under the earlier regime continues to be relieved at the rates that applied at the time it was incurred