One Minute Guide to R&D

26 April 2019
Slava Knazevs
Accounting & Compliance, Digital & Tech, Reducing Tax

Are you missing out on Research and Development (R&D) tax relief?

R&D tax relief is a government tax incentive designed to encourage companies to invest in research & development. R&D isn’t just incurred by software or pharmaceutical companies. Surprisingly thousands of businesses are missing out on this valuable relief as they are unaware that the relief could be applicable to them.

Any company that spends money developing new products, processes or services or enhancing existing ones could be eligible for R&D tax relief. A total of £3.5 billion was claimed in R&D tax credits by innovative UK businesses in 2016-17 alone.

How it works

If you’re spending money on qualifying innovation, you can make an R&D tax relief claim. The relief can reduce your Corporation tax bill or the company can claim payable cash credit.

Who is eligible?

R&D tax relief is not limited to certain sectors – any company in any industry may be eligible for R&D tax relief as long as they fit the following criteria:

  • They are incorporated in UK
  • They seek to resolve technological uncertainty
  • The company must have actually spent money building a technology solution

What projects are likely to qualify?

The scope for identifying R&D is huge – in fact, it exists in every single sector. If you have a project where the outcome is not certain, as the knowledge of how it has to be done (or even if this is possible) is not commonplace, then this could be R&D. Some examples include:

  • Identifying and developing improvements in processes
  • Developing a new product, or adapting an existing product
  • Developing or adapting equipment to improve efficiency or sustainability
  • Creating new environmentally friendly methods and sustainable technology
  • New data analysis algorithms
  • Resolving conflicts between hardware and software
  • Solving a problem with a previously untried technique

Benefits of R&D relief claim

If eligible, you can claim relief for your last two completed accounting periods with qualifying expenditure identified by us enhanced by 130%.

When this enhancement is deducted from your profits it will reduce your tax bill. If it creates a loss then this can be carried back to a previous year’s profit to get a tax refund, carried forward to utilise against future profits or alternatively cashed in to get a cash credit .

If you think you might have a possible Research & Development claim then get in touch with your account manager or Slava Knazevs. Our fees are computed on a no win no fee basis so even if you are uncertain about whether a  project qualifies give us a call- you have nothing to lose and potentially a substantial tax saving or rebate to enjoy! We have a 100% success rate with qualifying claims.

The content in this blog is correct as at 4th April 2019. See terms and conditions.

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