Check with us to see if you qualify
Research and Development (R&D) Relief is a corporation tax relief that can reduce the company's tax bill or, in certain circumstances, generate a loss which may be surrendered in exchange for a refundable tax credit.
There are two schemes available with differing rates of relief, depending on the size of your business:
The Small & Medium-sized Enterprise (SME) Scheme
Under the SME scheme the tax relief on qualifying R&D expenditure is currently 225%, so, for every £100 spent £225 of relief is available. If this enhanced R&D relief gives rise to a trading loss then it can be relieved against other profits. Alternatively the loss can be surrendered in exchange for a refundable tax credit of 11%.
The Large Company Scheme
Tax relief on allowable R&D costs under the large company scheme is 130%. However, there is no mechanism within the large company scheme to allow for the surrender of losses in exchange for a refundable tax credit.
Qualifying R&D Projects
R&D Relief is available if an R&D project ‘’seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty - and not simply an advance in its own state of knowledge or capability’’.
This is a very broad definition and can encompass a wide range of activities, including those which may not appear to be research and development.
For example a factory which incurs costs developing improvements to its production line to increase productivity could potentially qualify for relief.
Qualifying R&D Costs
The main categories of qualifying costs are:
· Employee costs (subject to time apportionment to reflect time spent of the relevant project).
· Sub-contractors or agency staff costs.
· Consumable or transformable materials used directly in carrying out R&D.
· Some utility bills.
· Computer software used directly in the R&D.
Although R&D Relief is only available for revenue expenditure it is possible to claim 100% R&D capital allowances on the costs of plant & machinery which relates directly to the R&D project.
We Can Help You
At Rothmans we have extensive experience of R&D claims across a number of industries. If you think that your business may qualify for relief please contact us.