R&D tax credits

Can you claim tax credits for research and development?

Research and development tax credits are an incentive designed to encourage innovation among British companies by reducing their corporation tax bills.

In particular, research and development expenditure credit, or RDEC, is a scheme targeted at larger businesses using innovative technology to solve problems.

They can be massively helpful in supporting engineering firms, tech startups, software development and even creative businesses.

That’s because they offer the opportunity to discharge liabilities or receive a cash payment depending on whether your business makes a profit or loss.

What are R&D tax credits?

A tax credit is an incentive offered by the Government, effectively reducing the amount of tax you have to pay if you meet certain criteria.

In April 2016, R&D expenditure credit (RDEC) was launched, replacing something known as ‘the large company scheme’.

RDEC can also be claimed by SMEs which have undertaken R&D work as a subcontractor for a bigger company – an interesting option to explore if you’re not eligible for SME R&D tax relief.

It can be claimed by businesses in a range of sectors, from engineering to software development, as long as their project meets the tax definition of research and development:

  1. Sets out to achieve an advance in science and technology.
  2. Discovers and attempts to overcome uncertainty.
  3. Comes up with a solution that couldn’t easily have been worked out by another expert in the same field.

Claiming R&D tax credits

You can claim from the date you start working on the problem (the ‘uncertainty’) your R&D programme is intended to solve, up until you find a solution or the project is shut down.

In certain circumstances, you can claim things such as:

  • staff costs for those working directly on the project
  • subcontracted expenditure
  • R&D-related consumables
  • production and distribution costs.

Speak to a R&D tax consultant

Talk to us for detailed advice on how to claim R&D tax credit, especially if you work in software development or the creative industries.

Help with R&D tax credits

  • Analysis of your business eligibility
  • Assessment of your claim
  • R&D claims built into your tax return

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