Research and development (R&D) tax relief is a valuable tax relief that can significantly reduce your company’s corporation tax payment, and even get you some cash back. It is a means of encouraging companies to innovate through a cash reward for developing new technologies to substantially improve products, processes, devices, materials and/or services.
The R&D tax credits are available to all companies and not just for traditional manufacturing and engineering companies or hi-tech businesses. If you have a problem in your business and use some element of science or technology to try to fix it, then you might have the potential for a claim.
All companies, large and small, can claim if they undertake qualifying work – even if they do not pay corporation tax because they are unprofitable. The development does not need to be successful – abortive or failed projects can also be included in the claim.
The additional tax relief can effectively deliver a tax repayment of 43.7% of qualifying R&D costs for small and medium-sized companies.
A claim for R&D tax relief and credits must be made within two years of the expenditure being incurred, depending on the date of the company’s accounting year end.
