R&D Tax Credits

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Categories: Tax

This is a quick guide to R&D Tax Credits and whether you can qualify and what you can qualify for.

What are R&D Tax Credits?

Research and Development (R&D) Tax Credits are an enhanced expenditure tax deduction offered by the government for investing in innovation. They can be a valuable method of cash for businesses to be able to invest in further growth and even more R&D.

How do R&D Tax Credits work?

Companies that spend money developing new products, services or process or even enhancing existing ones, are eligible to make and R&D Tax Credit claim. If your company is spending money on innovation then a claim can likely be made for either a corporation tax reduction or cash payment. There is a huge scope for claims across many industries and you can often claim for two previous accounting periods if you are claiming for the first time.

Can I claim an R&D Tax Credit?

To be able eligible to claim R&D Tax Credits, you must:

  • Be a limited company in the UK
  • Be subject to Corporation Tax.
  • Have carried out qualifying research and development activities.
  • Have spent money on these projects.

What counts as an R&D activity?

The R&D criteria set out by the government are purposefully broad. No matter what size or sector you are in, if your company is taking a risk by attempting to ‘resolve scientific or technological uncertainties’ then you may be carrying out a qualifying activity. This could include:

  • Creating new products, services or processes
  • Changing or modifying an existing product, service or process

Is it worth claiming?

SMEs (small and Medium Enterprises) are able to claim up to 33p for every £1 spent on qualifying R&D activities.

Large companies are able to claim up to 11p for every £1 spent on qualifying R&D activities.

What are the next steps?

If you think you are a qualifying company undertaking qualifying activity then you should book an initial call with us to run through this. you can do that right here

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