R&D Credits and UK QIP Thresholds from April 2027

The UK government plans to change how certain expenditure credits affect Corporation Tax Quarterly Instalment Payments (QIPs) from April 2027. Research and Development Expenditure Credits (RDEC), Audio-Visual Expenditure Credits (AVEC) and Video Games Expenditure Credits (VGEC) are planned to be excluded when determining whether a company is within the QIP profit thresholds.

The purpose is narrow: a company should not be brought into QIPs solely because it receives one of these credits. This does not create a new R&D relief, change which costs qualify, or remove Corporation Tax. It changes payment timing and can ease cash-flow pressure for affected companies. The policy is described as planned secondary legislation, so confirm the final law before changing a payment schedule.

What are QIPs?

Large companies and certain groups pay Corporation Tax by quarterly instalments rather than waiting for the normal payment date. Whether a company is within the QIP regime depends on its augmented profits, profit thresholds, accounting period and group circumstances.

QIP status affects when tax is paid, not necessarily how much Corporation Tax is due. Moving a company out of QIPs can improve cash flow by delaying instalments, but it does not turn a tax liability into a permanent saving.

The R&D/creative-credit change targets an unusual interaction: a credit is a tax asset, but including credit income in the augmented-profit calculation can push a company over a QIP threshold even though the credit itself may later discharge Corporation Tax.

What changes from April 2027?

The Tax Update 2026 summary says the government plans to amend the definition of augmented profits so that RDEC, AVEC and VGEC are no longer included when determining whether a company is within the QIP regime from April 2027.

This is a threshold adjustment, not a general exemption from Corporation Tax or a statement that the credit is ignored in every tax computation.

Why R&D credits can affect payment timing

An RDEC is a stand-alone credit. HMRC's manual explains that it can be used to discharge a Corporation Tax liability and, in some circumstances, other liabilities or future QIPs after a valid claim. But the credit can also be included in the augmented-profit calculation under the current framework, potentially increasing the apparent profits used for QIP status.

The planned exclusion addresses the threshold interaction. It does not change the order in which a valid credit is used or the rules for a payable credit. Companies should model the credit and QIP calculation separately:

1. calculate qualifying expenditure and the credit;
2. determine the company's Corporation Tax liability;
3. test QIP status under the applicable augmented-profit definition;
4. schedule payments under the correct due dates; and
5. apply or receive the credit according to the final statutory rules.

Do not subtract a projected R&D credit from the threshold without confirming the accounting period and final legislation.

Who may benefit?

The affected company is likely to be one whose QIP position is close to a threshold and whose augmented profits include RDEC, AVEC or VGEC. A company with profits well above the relevant thresholds may remain a QIP payer even after the exclusion. A group can also have associated-company or group-payment issues that the credit change does not resolve.

Eligibility and timing are facts-sensitive. Do not assume that a credit forecast is available simply because the company expects to incur R&D costs.

What does not change?

The measure does not, by itself, change:

• the definition of qualifying R&D or creative expenditure;
• the rate or calculation of RDEC, AVEC or VGEC;
• the requirement to submit a valid claim and supporting records;
• the company's Corporation Tax liability;
• the normal QIP payment dates where the company remains a QIP payer; or
• group and associated-company rules that affect augmented profits.

The company should not use the policy announcement to delay a payment that is due under current rules. Update the schedule when the legislation takes effect and the accounting period falls within the commencement.

Cash-flow planning checklist

1. Identify whether the company is currently a QIP payer and why.
2. Separate RDEC, AVEC and VGEC income from ordinary trading profit.
3. Recalculate augmented profits with and without the planned exclusion.
4. Check group, associated-company and accounting-period facts.
5. Keep the current payment schedule until the final legislation applies.
6. Reforecast instalments after the claim and QIP status are confirmed.
7. Retain the credit computation, claim evidence and payment reconciliation.

Frequently Asked Questions

Evidence and decision checks

A reliable rd credits qip thresholds uk 2027 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable rd credits qip thresholds uk 2027 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable rd credits qip thresholds uk 2027 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Building a defensible R&D claim

Start with the project question: what scientific or technological advance was sought, what uncertainty could not be resolved from a competent professional's existing knowledge, and what work was undertaken to resolve it? Keep contemporaneous project notes, technical designs, test results, failed approaches, version history and the names of people involved. A commercial success or a new product is not, by itself, evidence of qualifying R&D.

Map staff time, subcontractor work, consumables, software and other costs to the qualifying project. Reconcile the claim to payroll, invoices and the accounts, and document the apportionment method. Separate ordinary product development, market research, routine testing and capital expenditure unless the current rules support their inclusion. The scheme, company size, tax year and notification requirements must all be checked against the official guidance.

Keep the additional information form, claim reference, adviser workpapers and board approval. If the project or company facts change, revisit the claim rather than carrying forward last year's percentages. Label any threshold or policy announcement by its legal status and effective date.

The useful planning distinction is between tax liability and payment timing. The proposed exclusion may reduce QIP cash-flow pressure, but it is not a new R&D credit or a reason to ignore current payment dates.

Official sources

• HM Treasury: Tax Update 2026 QIP measure
• HMRC: RDEC effect on quarterly instalment payments
• HMRC: RDEC payment of credit
• HMRC: Finance Bill 2026/27 documents

These HM Treasury and HMRC sources are the official references for the planned QIP threshold treatment, RDEC administration and the policy status of the April 2027 measure.