Research and Development (R&D) reliefs support companies that work on innovative projects. It can be claimed by a range of limited UK companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
You may be able to claim Corporation Tax relief if your project meets HMRC's definition of R&D.
The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science - like economics. General marketing activities are also non qualifying.
The project must relate to your company's trade - either an existing one, or one that you intend to start up based on the results of the R&D. If you are unsure if your business qualifies, a short call with us will establish if you have a claim.
To get R&D relief you need to explain how a project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
Your project may research or develop a new process, product or service or improve on an existing one.
The amount of tax relief you can claim depends on a number of factors including:
- The size of the company claiming relative to turnover, size of balance sheet, and employee levels
- The types of activity involved in a innovative project, for example staff costs, consumables and prototypes
- The costs incurred for qualifying projects can be found in the companies P&L for the qualifying claim period.
This is a simple explanation of R&D Tax relief and goes some way to demonstrate why it is imperative you consult an R&D tax relief specialist. Optimising a successful claim is down to a combination of innovation narrative and accounting, not one in lieu of the other.