How does R&D Tax Relief work?
Businesses that spend money on their innovation can make a claim and receive up to 33% of qualifying costs in return. This can take the form of a reduction in Corporation Tax, a repayment or an R&D tax credit cash refund, depending on your circumstances and what is most beneficial to your business.
Enhanced tax relief is currently provided at a rate of 230% on qualifying spend. This equates to £46 tax relief for every £100 spent.
Qualifying expenditure includes staffing costs, materials used, utilities, subcontractors R&D including professional fees, Capital Allowances, and indirect activities including support activities, training, research, data collection so long as they are directly related to the R&D project.
Can I claim HMRC R&D Tax Credits? Projects that qualify as R&D:
Though traditionally aimed at scientific advancement, the scope of qualifying sectors for R&D is now much wider. Any company creating a product or service that improves what is already available and involves the use of science or technology can apply.
Typical sectors engaged in research and development include: