Research and development tax relief is available from HMRC for companies with projects overcoming technological uncertainties and making scientific advances.
What are R&D Tax Credits?
Research & Development (R&D) Tax Credits are a type of Corporation Tax Relief supporting companies with innovative projects in science and technology. Introduced in 2000, R&D Tax Credits claims can be made by companies of any size which seek to research or develop an advance in their field.
How does it work?
R&D Tax Claims are made to HMRC through your Company Tax Return form, but before you can do this you need to work out and evidence your eligible R&D costs. Tychon support businesses by collating all the relevant information into a report and calculating the eligible spend.
What counts as R&D?
To be considered R&D your project must aim to create an advance in science and technology, which could not have been worked out easily by a professional in the field. Your project must aim to overcome a ‘scientific or technological uncertainty’ using research, testing and analysis.
What costs qualify for R&D Tax Credits?
Certain costs which are directly incurred by your R&D project can be claimed back, from the date you start working on it until you reach a scientific or technological advance, or the project is stopped. These may include employee costs, subcontractor costs, software, clinical trials or consumable items.
Which incentive is right for me?
The incentive chosen depends on company size. Small and Medium Enterprise R&D Relief can be claimed by SMEs with under 500 staff and a turnover of less than 100 million euros. RDEC is available for large companies and SMEs subcontracted by a large company.
How much is a claim worth?
SME’s can claim between 14-33% on any costs that qualify. As a guide, an SME can expect approximately 25% of an eligible spend to be returned. For larger companies claiming RDEC, the amount depends on expenditure credit, so an approximate value will require further consultation.
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