R&D Tax Relief encourages and supports companies that work on innovative projects in science and technology. It is one of the Government’s top tax incentives but often overlooked.
The tax relief is available to companies that meet HMRC’s definition of R&D, and in most cases, allows for a further tax deduction of 130% in respect of the costs involved, so making a total deduction of 230%!
In order to get the R&D relief, the work undertaken by the company must be a project or part of a project that seeks to make an advance in science and technology and you will need to explain how the 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 professionals in the field
Although the criteria looks challenging, you might be surprised what HMRC will allow.
If the additional tax relief results in a tax loss for the year, the loss attributable to the R&D can be ‘cashed in’ for a tax credit equal to 14.5% of the loss. This can provide a cash injection when needed most.
If you are thinking of creating an innovative product or improving or developing a process (or have done so within the last 2 years), you may be entitled to make an R&D claim. Why not speak to one of our tax experts at Team CB – we would be delighted to help you.