The Government replaced the previous super-deduction for large companies with the Research and Development Credit (RDEC) in 2013. This was to encourage more R&D by large companies.

Universities and charities were never intended to claim the RDEC and were unable to claim under the previous large company scheme. However, HMRC received a number of claims from universities and charities.

The Government has since amended legislation so that universities and charities are unable to claim the RDEC, in line with the original intention of the policy. This is to ensure that the scheme remains effective and well-targeted to business Research and Development (R&D).

This measure relates to a university’s or charity’s own independent research, and also for the R&D they carry out as sub-contractors. This does not affect ‘spin out’ companies used by universities or charities to commercialise their research. This also does not affect any claims made to date, and universities can continue to claim for any qualifying expenditure they have incurred prior to 1 August 2015.

HMRC has not issued a revised guidance for RDEC but the appropriate section of its manuals can be accessed here.