Introduced in 2000, R&D tax credits were designed to encourage companies to invest in innovation. Companies that spend money developing new products and services or improving existing ones may be able to claim back a proportion of expenditure as tax credits. By helping companies financially to invest in innovative new techniques, the government intends the UK to become more competitive internationally.
Significantly, it's not just research labs and technology companies that are eligible to claim R&D tax credits. Any company that is creating new products, processes or services or modifying existing ones is likely to be eligible. You can also include work you did for a client as well as your own projects.
Small to Medium Enterprise (SMEs)
If your company employs fewer than 500 staff and has less than €100 million turnover or €86 million gross assets. R&D tax credit claims are made through government's SME R&D tax credit scheme. Most companies, including start-ups, fall into this category. In practice, companies can get back up to 33% of the amount they've spent on research & development activities. The money is paid as a reduction in Corporation Tax or, in some cases as a cash lump sum.
If your company has 501+ employees, greater than €100 million turnover or €86 million gross assets. Tax credit claims for large companies are made through the government's R&D expenditure credit (RDEC) scheme. Typically can get 10% of your R&D expenditure back.
When our advisors process your R&D tax credit claim they will look for the following types of qualifying expenditure: