Research & Development (R&D) tax credits are a government tax incentive set up to give innovative companies money back for any costs they have incurred in this area of their business.

 

 

Essentially, they are the Government’s way of rewarding businesses that are developing new, or appreciably improving existing, products, processes, systems and materials — and thereby increasing the country’s wealth creation capacity.

HM Revenue & Customs states the following: “Your company or organisation can only claim for R&D Relief 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.”

 

R&D Tax Credits apply to businesses that are liable for Corporation Tax. They can help to reduce a corporation tax bill or can be claimed as a cash sum paid back to a company by HM Revenue & Customs, due to an overpayment of tax.

 

Types of qualifying R&D expenditure are typically staff costs, software, utility bills, and any subcontracted work and materials. These R&D costs can be accelerated up to 230%.