Research & Development Tax Credit
Research and Development tax relief for SMEs
Research & Development, or R&D, is what companies carry out to gain new knowledge so that they can create, implement and review new products, services, and processes.
For many companies, it’s an essential part of their work, especially in the earlier stages of developing or creating something new, as it often allows them to gain a competitive advantage over others in the industry. However, it can also be a financial risk – especially if your project doesn’t work out the way you had hoped. This is where R&D tax credits can help.
Ecom Accountax ongoing accounting and tax service work alongside the R&D offering. We can take care of all your company’s accounting needs with our regular accounting service and assist with the R&D claim in addition to this.
What projects can be included as R&D?
For your work to qualify for R&D relief, it must be part of a specific project to make an advance in science or technology (this does not include social sciences such as economics).
Projects also need to relate to your trade – either an existing one or one being developed because of your R&D work. You should be able to explain how your work has:
- looked for an advance in science and technology.
- overcome uncertainty.
- could not be easily worked out by a professional in the field.
What are R&D Tax Credits and how do they work?
To help businesses in the UK grow and develop, and to encourage continued innovation, the government has created an incentive scheme – R&D tax credits.
It allows up to 33.35% of a company’s R&D spend to be recovered either as a reduction in Corporation Tax or a cash repayment. It is tax-free and can be used for a wide range of purposes, such as hiring new employees or investing in new equipment.
In a nutshell, the incentive scheme means that a percentage of the money your business invests in ‘innovation’ can be claimed back.
