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loss making companies tax relief


Loss Making Companies What you Could be Eligible For


&D tax credits operate by reduction a company’s profits in the tax computation and subsequently reducing corporation tax paid and payable.

However, it is not only profitable companies who can benefit from the relief. This relief enables loss making companies to surrender the loss attributable to R&D tax credits for a payment from HMRC.

Calculating R&D Tax Relief

There are two methods of calculating the relief for loss making companies:

  1. Loss making SME’s may surrender the R&D expenditure receiving a cash payment from HRMC of 14.5%. The way the legislation actually operates, this could mean that a loss making company may actually receive £33 for every £100 of R&D loss surrendered.
  2. Loss making large companies must use the above the line credit if they wish to receive a cash payment for R&D losses. This calculation was introduced as previously large companies could not benefit from the cash refund if they were loss making. The effect of the Above the Line Credit legislation is that a payment equal to 10% of the R&D expenditure may be available.


Loss making companies also have the option of not surrendering the loss arising from the R&D claim and carrying the loss forward/backwards as with any other trading loss. Our consultants will ensure a full understanding of your company’s past and future activities and profits is undertaken maximising the benefit of the R&D claim.

Help with R&D Tax Relief for Loss Making Companies

Given the complexity of making claims for loss making companies we strongly believe a significant number of loss making companies are not fully utilising R&D tax credits and the associated tax relief. We recommend you to contact us and discuss your position with one of our helpful consultants in Manchester.