R&D Tax Relief – Does your business qualify?

R&D Tax Relief - Does your business qualify?

Research and Development Tax Relief (R&D) is a relief that businesses may be able to claim if they incur expenses whilst developing or enhancing existing products, services or processes.

Many different businesses can claim R&D relief if they seek to research and develop an advancement in their field. In addition, businesses can also claim relief on unsuccessful projects.

A business needs to consider the following to determine if the project is eligible for R&D relief:

  • Looked for an advance in science or technology
  • Had to overcome an uncertainty
  • Tried to overcome the uncertainty
  • A professional could not easily work out a solution

Small and medium sized enterprises (SME) Research and Development Relief

SMEs can claim Research and Development Tax Relief if:

  • There are less than 500 staff
  • The turnover is under 100 million euros, or the balance sheet total is under 86 million euros

Companies can deduct a further 130% of their qualifying costs from the yearly profits. In addition to the normal 100% deduction, equaling a 230% deduction.

An SME that makes a loss can claim a tax credit of up to 14.5% of the surrenderable loss.

Qualifying Costs

A business can make a claim for a project as soon as work begins on the project or when the project ends. Furthermore, companies can also claim when there is a development or discovery in the advancement.
  • Employee costs
  • Subcontractor costs
  • Software
  • Consumable items
  • Clinical trials volunteers

Non-qualifying Costs

Meanwhile companies cannot claim for:

  • Cost of land
  • Rent or rates
  • Cost of patents and trademarks
  • Capital expenditure
  • Production and distribution of goods and services

Research and Development Expenditure Credit

R&D Expenditure Credit (RDEC) is available for large companies working on R&D projects.

SMEs and large companies can also claim RDEC if they’re subcontracted to do R&D work for a large company. RDEC is a tax credit at 13% of the qualifying R&D expenditure.

Is your business eligible?

Contact us for more information on R&D tax relief or to find out if your business is eligible to make a claim.

Call us on 01704 891676

Email us at info@stseurope.co.uk

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This guide is an informative piece and does not constitute tax advice for individual matters.