R&D tax credits were introduced for Small and Medium Sized Enterprises (SMEs) in 2000 and for large companies in 2002. R&D credits are a Corporation Tax relief used to encourage innovation and enterprise within the UK economy.Large companies can currently claim an 11% Research and Development Expenditure Credit (RDEC) also known as an ‘above the line tax credit’ for qualifying expenditure. The Chancellor announced that this rate is to be increased to 12% with effect from 1 January 2018. This will allow large companies to claim more tax credits for their R&D expenditure and is expected to drive further investment in R&D.SMEs can currently claim R&D tax credits of 230% for expenditure incurred on or after 1 April 2012. No increase in this tax credit was announced. A SME is a company with less than 500 employees and or either has an annual turnover under €100 million or a balance sheet under €86 million. There are also a number of other factors that must be considered such as whether the SME is part of a larger enterprise.A few days before the Budget, the Prime Minister Theresa May also announced that the government is to invest a further £2.3 billion in R&D by 2021-22.