They seem to be the hot topic at the moment for many businesses, but for those not yet taking advantage of this tax relief – here is a summary of the basics:
- Company’s may be able to claim a tax credit for Research and Development (R&D) expenditure that they incur
- R&D expenditure is work to resolve scientific or technical uncertainty, aimed at achieving an advancement in science or technology – including new products
- The process for claiming is different for those businesses that are Small or Medium sized, and for those that are deemed to be large companies
- One of the main conditions is that the company has to be paying Corporation tax – it cannot be claimed by a Sole Trader or Partnership, or a Company that doesn’t pay Corporation tax
- The company also has to be a Going Concern
- Any claims have to be against revenue spend – i.e not against Capital spend
The following types of spend qualify as R&D expenditure:
- staff costs directly attributable towards R&D activity, including agency costs
- materials used directly in R&D work
- Fuel, utility and software costs directly involved in R&D activity
R&D credits can now be claimed for any amount, up to £7.4m for any one project.
The credit is a % of R&D spend, but the % varies depending on whether you are a Small or medium company, or a Large Company.
For more information about whether your Company can claim R&D tax credits, and how much you might be entitled to, get in contact.
