R&D Tax Reliefs Explained

If your business is involved in innovating processes, products or services, you could be eligible for R&D tax reliefs or R&D tax credits as it is sometimes referred to. But we all know that claiming tax credits is a complicated process, right? Wrong. With the right experts in your corner, you could see real returns on even unsuccessful projects using this government relief scheme.

Forget the myths. Let us walk you through the basics:

What are R&D Tax Reliefs?
• Research & development (R&D) tax reliefs are a form of government tax relief rewarding UK companies that are investing in innovation in their chosen sector.
• Relief rates remunerate eligible companies the equivalent of up to: 33p for every £1 of expenditure for small businesses; 8.8p per £1 for large organisations.
• R&D tax reliefs can complement innovation grants for research and development funding – or be used as an alternative.

Am I eligible?
• R&D tax reliefs are not sector specific. If your business is trying to ‘resolve scientific or technological uncertainties’ by creating new products, processes or services – or modifying existing ones – then you could be eligible.

What can I claim for?
• If your project is eligible, you can claim R&D tax reliefs whether it was successful or not.
• You can claim R&D tax reliefs for your previous two financial years – so in 2018, you could claim for 2017 and 2016.
• Reliefs are calculated based on your research and development spend. If your company is profitable, relief will be delivered in the form of a Corporation Tax reduction. If your company is loss making, it will be available as a cash credit or combination of the two.
• Costs you can claim for include: staff expenditure (salaries, NIC & pension contributions); fees for subcontractors and freelancers; spend on materials and consumables (including heat, light & power) used in the R&D process; outlay on certain kinds of software.

Still have questions? Our R&D tax relief experts will be happy to answer them. Call us on 01628 770 770 to find out if you’re eligible.

Get in touch

Whether you're setting up, growing or selling your business, if you want award winning accountancy, business and tax advice call us on 01628 770 770 or complete our enquiry form:

Make an Enquiry