R&D Tax Credits

Companies can currently claim additional tax relief for the expenditure of a revenue nature incurred on qualifying ‘research and development’ activities.

Legislation was introduced in 2012 which increased the rate of the additional tax relief from 100% to 125% for qualifying expenditure incurred by small or medium-sized enterprises (SMEs) on or after 1 April 2012.

This gives a total tax deduction of 225% on the expenditure incurred and an effective corporation tax relief equal to 45% (based on the current 20% small companies corporation tax rate).

If a company is currently loss-making, which it may be during the early years of trade, the loss applicable to research and development can be surrendered in return for the payment of an 'R&D tax credit’.

The government has also introduced further changes in respect of expenditure incurred on or after 1 April 2012 as follows:

• Abolishing the rule previously limiting a company’s R&D tax credit to the amount of PAYE and NICs paid in a particular year
• Abolishing the £10,000 minimum expenditure condition
• Simplifying the scheme in respect of work done by subcontractors

We can assist you with the submission of successful claims by:

• Discussing research and development projects being undertaken and assisting in recognising qualifying activities
• Producing detailed reports illustrating how qualifying R&D projects meet HMRC guidelines
• Dealing with the submission of claims on the company’s behalf to HMRC specialist R&D units
• Corresponding with HMRC in relation to any further information required and agreeing to the claim