Understanding the RDTI refundability rules
New RDTI refundability rules have been introduced as part of the COVID-19 response to help ease the financial burden on businesses that are performing R&D. The new rules encourage those businesses that can still undertake R&D to continue, by facilitating easier access to refundability.
In 2019/2020 broader refundability rules were proposed for the RDTI, to apply from year two of the scheme (i.e. the 2020/2021 tax year). The COVID-19 Response Bill brings forward those rules to apply in the first year of the scheme (the 2019/2020 tax year).
If you’re in a tax loss position or don’t have enough income tax to pay to use all your R&D tax credits, you may now be eligible to have your R&D tax credits refunded in cash. Qualifying businesses can receive R&D tax credit refunds up to a cap based on labour-related taxes.