What are R&D Tax Credits?


R&D Tax Credits at a glance:

WHAT: R&D expenditure is money spent on a project which contains technical uncertainty; for example: Labour (direct/subcontracted) – development, technical analysis, management, testing, prototyping, developing manufacturing processes. Consumables – software licenses, heating/lighting, supporting software/SaaS, and part of hardware costs.

WHO CAN CLAIM: Both profitable and unprofitable UK companies that invest in R&D (in- house or outsourced labour, testing, prototyping, developing manufacturing processes etc).

HOW MUCH : Usually amounts ranging from 15-32% of the R&D costs in the last two completed financial years.The funds are received as a refund of Corporation Tax or, if the company is loss-making, as a cash credit.

Those are the key facts about the R&D Tax Credits scheme. Now that’s whet your Tax Credit taste buds, let’s break it down a little more.

Launched in 2000, the R&D Tax Credits scheme, is a tax break provided by the government. In order to make the UK more competitive globally, R&D Tax Credits is provided as an incentive for technical and manufacturing firms to invest in developing their own innovative products.

How do they work? R&D Tax Credits work by reducing your taxable profit and thereby decreasing your Corporation Tax. However, the scheme is designed to help companies even if they are in profit or not, so if you owe a small amount of Corporation Tax or even none, the scheme can still provide you with cash in exchange for “surrendering” some of the tax loss that has been created.



GrantTree  @GrantTree,Nov 28
Puzzled about the R&D Tax Credits and Grants relationship? Need insight about how to successfully access both? https://t.co/JVDoxT6zam 
GrantTree  @GrantTree,Nov 24
We unpick what yesterday's Autumn Statement means for the future of R&D in Britain and how it impacts your business. https://t.co/2XP90BmL4Q 
GrantTree  @GrantTree,Nov 23
RT @Payah:good news for @GrantTree friends and clients! https://t.co/8lAbYYUcaG 
GrantTree  @GrantTree,Nov 07
The age old question (well in R&D Tax Credits anyway!): should you file with your accountant or a specialist? https://t.co/HEChpmvvNM 
GrantTree  @GrantTree,Nov 03
RT @BizAdvice_UK:Find out which tax credits and reliefs you are eligible for as an #entrepreneur. https://t.co/Z141n2icPq https://t.co/zkO6TS2W5Q