R&D Tax Credits

Overview

R&D is a valuable relief the UK government offers to incentivise businesses to innovate and enhance productivity. R&D tax credits are a tax relief designed to encourage greater R&D spending and investment in innovation. They work by either reducing your company’s liability to corporation tax or giving you a cash payment.

There are two schemes for claiming relief:

1. Small or Medium-sized Enterprise (SME)
2. Research and Development Expenditure Credits (RDEC)

R&D will qualify under either scheme if you attempt to overcome scientific or technological uncertainties at your own risk.

With the SME scheme up to 33% of the qualifying R&D costs can be set against corporation tax. You can backdate claims up to two years from the end of your accounting period.

Qualifying Criteria

The scheme itself requires there to be an advance in science or technology.  A business must have attempted a project at their own risk by creating new, or enhancing existing, products, services, software, or processes.

For a business to qualify it must be an SME (HMRC definition so must be limited liability and subject to corporation tax). There must be fewer than 500 employees and have either a turnover under €100 million or a balance sheet net asset value lower than €86 million.

It’s a fact that many companies miss out on claiming this relief because they simply do not know about it, or they’ve heard about it and incorrectly assume it does not apply to them.  It can be complex to navigate and it’s crucial to be fully aware of what are qualifying costs – and what cannot be claimed.

If you feel you have carried out anything innovative or worked on any project you consider could be classified as ‘research & development’, then do please contact us and we’ll advise on how to proceed to the next stage.

Click on the link to determine if you may be eligible to claim R&D tax credits.