R&D Tax Credits

What are R & D Tax Credits?

(R&D) Research and Development Tax Credits are a government incentive that are designed to reward UK companies for investing in innovation.

Any company that is spending money on developing new products, processes or services; or improving existing ones, are eligible for R&D tax relief. If you’re spending money on your innovation, you can make an R&D tax credit claim to receive either a cash payment or Corporation Tax reduction. The area for identifying R&D is everywhere – in fact, it exists in every single sector. And if you’re making a claim for the first time, you can typically claim R&D tax relief for your last two completed accounting periods.

To benefit from R&D tax incentives, you must:

1. Be a limited company in the UK that is subject to Corporation Tax.
2. Have carried out any qualifying research and development activities.
3. Spent money on these projects.

R&D Tax Credit Rates

SMEs are able to claim up to 33p for every £1 spent on qualifying R&D activities. The average claim made by SMEs in the UK is £53,876 (2016-17).

Large companies are able to claim up to 10p for every £1 spent on qualifying R&D activities. The average claim made by large companies in the UK is £272,881 (2016-17).

If you have questions about your eligibility for R&D tax credits, or are wondering how much they might be worth to your business, get in touch with our team.