Designed to encourage companies to develop new technologies that substantially improve their products, processes, devices, materials and/or services, R&D tax credits can significantly reduce your company’s corporation tax, and even get you some cash back.

It is common for companies to overlook eligible expenditure, resulting in missed potential claims. The government offers R&D tax relief as an incentive for companies to invest in R&D activities and claim relief on qualifying costs. The rates of relief are:

• 230% of the qualifying R&D costs may be claimed as a tax deduction by SMEs
• R&D expenditure credit available for large companies giving relief at 9.72%
• In addition, SMEs may choose to ‘trade in’ their R&D losses and receive 33p for each £1 spent on qualifying R&D
• 100% allowances are also available on R&D capital expenditure

Resolving scientific or technological uncertainty is the objective of eligible R&D, which is carried out to achieve an advancement in science or technology. This advancement could be the development of a new product or process, or an enhancement of an existing one.

Considering that R&D tax relief can deliver a repayment of 24.7% of qualifying costs for small and medium-sized companies, it’s certainly worth exploring. But remember, a claim must be made within two years of the expenditure being incurred, depending on the date of your company’s accounting year-end.

If you are looking to find out if your business is eligible to claim R&D tax credits, or want help in claiming, contact our team who will be able to provide professional help and advice on your claim.