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Research and Development Tax Credit

R & D Tax credit for innovation
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What are R & D Tax Credits?

Research and development (R&D) tax credit is a government incentive introduced to reward UK companies for investing in innovation. It is a valuable source of cash for businesses to re-invest in their R&D, taking on new staff and achieving faster growth.

How do R & D Tax credits work?

Companies that spend money developing new products, processes or services; or enhancing existing ones, are eligible for R&D tax relief. You may not think you are carrying out R & D but it is amazing how many sectors do engage in R&D without knowing.

R&D is a Corporation Tax (CT) tax relief that may reduce your company’s tax bill if your company is liable for CT or, in some circumstances, you may receive a payable tax credit.

If you are a small or medium-sized enterprise (SME) R&D tax relief allows you to:


  • deduct an extra 130% of your qualifying costs from your yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
  • claim a tax credit if your company is loss making, worth up to 14.5% of the ( subject to certain restrictions)

Is my company eligible for R & D Tax Credits?

If you are a limited company and are carrying out qualifying research and development activities you will be eligible to make a claim even if the project is not successful. You can also claim for work you are carrying out on behalf of a customer of yours.If you are making your first claim you can claim for the last two accounting periods.

What is qualifying activity for R & D?

The criteria from HMRC is fairly broad, if you are taking a risk by trying to resolve a scientific or technological uncertainty then you may be carrying out a qualifying activity.

Here is a link to HMRC’s guidance.

Are you creating a new product, process or service or even modifying one?

If you want to find out more about your eligibility then don’t delay and contact us NOW to prevent time limits reducing your claim.


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