Research and Development (R&D) tax credits, also referred to as R&D reliefs, are a form of Corporation Tax relief that is available to companies in the United Kingdom that are working on innovative projects in science and technology. Any company in any industry can claim these tax credits, whether or not their project is successful.
The purpose of Research and Development tax reliefs is to incentivise companies to invest in research and development projects, which can be beneficial for both the company itself and the wider economy. By encouraging companies to invest in new and innovative technologies, R&D tax credits help to ensure that the United Kingdom remains at the forefront of global innovation.
For companies that are claiming Research and Development tax reliefs for the first time, it can be a little confusing to know what qualifies. HMRC has a specific definition of Research and Development, which can be summarised as follows:
R&D is experimentation and investigation undertaken in order to achieve an advance in science or technology. It includes activities such as designing experiments, testing hypotheses, and analysing results.
If your project meets this definition, you may be able to claim R&D tax reliefs. The most important thing is to make sure that you keep good records of all the relevant information so that you can provide accurate evidence to HMRC if they ask for it.
R&D tax credits can be a valuable form of Corporation Tax relief, so it's important to make sure that you claim any Research and Development tax reliefs that you are entitled to. If your company is successful, Research and Development tax credits can be worth up to 45% of the eligible costs - which will significantly reduce your Corporation Tax bill. Research and Development tax reliefs may also reduce any VAT liability if relevant products or services are sold to other businesses within the Research & Development industry itself.
To find out more about Research and Development tax reliefs, check out HMRC's Research & Development pages on the gov.uk website
If you are an SME looking to claim Research and Development tax reliefs for the first time, there is plenty of support available. Our R&D experts can advise you on Research and Development tax reliefs and whether your company qualifies or not.
If you're not sure if your business is eligible for Research and Development tax credits or would like help with claiming Research & Development reliefs, please contact us here, or by emailing us at email@example.com