Your R&D Questions Answered

Is your company involved in scientific and technological innovation?  Then you could be missing out on an invaluable tax relief.


What is R&D?

R&D takes place where you are carrying out a project that seeks to achieve an advancement in overall knowledge or capability in a field of science, or your taking a risk to solve a technological uncertainty.  Is your company developing a new product, process or service, or improving an existing one?


What tax relief can my company get?

Small and medium sized businesses will be able to deduct up to a further 130% of their qualifying expenditure from taxable profits.

This will either reduce your tax liability or create trading losses that you can either utilise in future years, allocate to other group companies or surrender for the R&D Tax Credit of 14.5% to generate an amount repayable to the company.


What if my company is large?

If your company has a head count of more than 500, and either your turnover is more than €100m or your balance sheet is more than €86m then your R&D claim will fall under the Research & Development Expenditure Credit (RDEC) Scheme.  An RDEC Tax Credit is worth 12% of your qualifying R&D expenditure.  This credit is taxable at the corporation tax rate of 19%. The 12% credit is then offset against your tax liability; A loss-making company could receive a repayable amount. The credit is effectively worth 10p for every £1 you spend on R&D.


What costs can I claim the extra relief on?

  • Staff costs of those involved in the project, including wages, Class 1 NIC and pension contributions
  • Externally provided workers
  • Sub-contracted R&D
  • Consumable items including water, heat and power consumed in the project
  • Costs of producing prototypes


What should I do now?

A claim for R&D is made on your Corporation Tax Return and if you haven’t already made a claim you can still make a back dated claim within the 12 month anniversary of the filing date of your company Return.

So if you think that you may be missing out give us a call on 01905 777600 or email us

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