Businesses across all sectors that qualify as a company undertaking R&D within the UK can access the biggest single funding tax incentive provided by the Government - the R&D tax credits.
What are tax credits and how could they help your business?
The credits are made available to qualifying companies either as:
- a tax deduction based on R&D spending;
- or it may be possible for small or medium sized companies (SMEs) to surrender their losses in return for a cash payment from HMRC.
How can my company benefit from R&D tax credits?
ALL companies spending at least £10,000 in their accounting year are entitled to claim a deduction when calculating their taxable profits of:
150 per cent of qualifying expenditure for SMEs (increasing to 175 per cent in respect of expenditure incurred on or after 1 August 2008)
125 per cent of qualifying expenditure for larger companies until 31 March 2008 and 130 per cent in respect of expenditure incurred on or after 1 April 2008, reducing the company’s UK corporation tax bill accordingly.
Read more about the SME scheme and the Vaccine Research Relief.
How do I know if my company is eligible?
The following definitions describe what is meant by R&D for tax purposes:
- Work to resolve scientific or technological uncertainty aimed at achieving an advance in science or technology
- If it is obvious to a professional how to achieve something, achieving it is not R&D
- Developing the means to deliver “content” can be R&D.
Tax relief rates
SME R&D tax credits scheme (from 1 August 2008):
- The rate of relief increased from 150 per cent of qualifying expenditure to 175 per cent of qualifying expenditure
- The scheme was extended to companies with more than 250 but less than 500 employees
- Large company scheme (from 1 April 2008)
- The rate of relief increased from 125 per cent of qualifying expenditure to 130 per cent of qualifying expenditure.