Corporation Tax Act 2009 section 1058

Amount of tax credit

Section 1058 sets out how to calculate the amount of the R&D tax credit that a qualifying small or medium-sized enterprise (SME) can claim for an accounting period.

• The R&D tax credit is calculated as 14.5% of the company's Chapter 2 surrenderable loss for the accounting period
• The credit is subject to a cap based on the company's PAYE and National Insurance contributions liabilities — the company receives the lower of the two amounts
• Certain companies may be exempt from the PAYE/NIC cap where specific exceptions apply
• The Treasury has the power to change the 14.5% rate by regulations without requiring new primary legislation