What is research and development tax credits?

Research and development tax credits are a new company tax relief that can either be used to reduce a company’s tax bill or for many small or even medium sized companies provide a much needed cash lump sum. The main aim of these tax credits is simply to encourage greater Research & Development spending to give and promote more investment in innovation.

 

By as early as 2006 about 22,000 different claims had been made, with just over 19,000 of these made under the Small to Medium Enterprise (SME) scheme also just under 3,000 of them were made under the larger scheme, amounting to just about £1.8 billion of support claimed through these schemes.

 

R&D tax credits work by allowing the companies to deduct up to 175% of qualifying expenditure on R&D activities when calculating their profit for tax purposes. Companies which are SMEs can, in certain circumstances, submit this tax relief to claim payable tax credits in a cash sum from HM Revenue & Customs.

 

Can I benefit from research and development tax credits?

Any company spending over £10,000 a year on a qualifying research and development (R&D) project are entitled to some deduction when they calculate their taxable profits of 150% of the qualifying expenditure for the SMEs (increasing to 175% in expenditure incurred on or after the August 1st 2008) or 125% of the qualifying expenditure for the larger companies up until 31 March 2008 and 130% in respect of the expenditure incurred on or after the April 1st 2008.

 

RandD UK Ltd
Unit 119,
Coney Green Business Centre,
Clay Cross,
Chesterfield,
Derbyshire,
S45 9JW

07836 683165

www.randdukltd.co.uk