Which R&D tax relief regime?

There are two R&D tax relief regimes.

SME R&D relief

This is for companies that have less than 500 employees and turnover less than €100m or a balance sheet less than €86m). Those companies get a super tax deduction for their R&D at 230% for every £1 spent, and losses generated by R&D tax credits can be surrendered to HMRC for cash at a rate of 14.5%.

Research and Development Expenditure Credit (RDEC)

This is a direct contribution of 13% from the Government more akin to a grant than tax relief and can be repaid if the claimant is loss-making. The extra benefit of RDEC is that it is booked as a reduction in operating costs, not tax and thus also helps to improve underlying profitability.

Capital expenditure

In addition to the R&D credit regimes, capital spend on R&D can also qualify for 100% capital allowances, and where the research gives rise to a patent, future profits attributable to that patent are effectively taxed at 10%.

Each of these reliefs and incentives has a two-year claim window, so if you have implemented R&D in the current financial year, you can revisit the position for the last two accounting periods too. All R&D incentives give rise to cash tax savings, and in some cases, actual cashback, so are invaluable in these unusual times.

Do you qualify?

Find out if your business could be eligible. Follow the link below to take our quick, online self-assessment. Our team will review your position and let you know if you are likely to qualify and under which regime you should claim.

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