Moreover, you can claim tax relief for research and development expenses that are up to 3 years old. The size of your company and its tax rate will determine the exact amount of tax relief that you can claim.

R&D tax relief is available in every single sector. To such qualifying companies who spend money developing new products or services, new processes, or enhancing the existing ones are eligible for R&D tax relief.

No matter what size or sector the business is in, if it is taking a risk by attempting to resolve scientific or technological uncertainties, it might be carrying out qualifying activity.

To benefit from R&D tax incentives, the business must be a limited company in the UK subject to Corporation Tax, have carried out qualifying research and development activities and have spent money on qualifying projects.

Disclaimer

Costs qualifying for R&D credits include:

• Staff, including salaries, employer’s NIC, pension contributions and reimbursed expenses
• Subcontractors and freelancers. Materials and consumables including heat, light and power that are used up or transformed by the R&D process
• Some types of software
• Payments to the subjects of clinical trials

The R&D tax credits are available to be claimed by various businesses regardless of their type and size. Any such business targeting efforts to bring innovation and improvement in its products or services and allocating a considerable amount of money for the purpose would be eligible for the R&D Tax credit scheme.

The incentives under the R&D tax credit claim depends on whether the business is an SME with fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets or a large company with 500 staff members or more and either more than €100 million turnover or €86 million gross assets.

SME’s can claim an R&D tax credit through the SME R&D tax incentive to SME R&D relief allows companies to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the standard 100% deduction, to make a total of 230% deduction and claim a tax credit if the company is loss-making, worth up to 14.5% of the surrenderable loss.

A large company can use the Research and Development Expenditure Credit. It can also be claimed by SMEs and large companies who have been subcontracted to do R&D work by a large company. The amount of tax credit is 13% from April 2020. To make an R&D credit calculation, you need to identify qualifying expenditures. When you deduct your enhanced expense from your taxable profits or add it to your loss, it will result in:

• a Corporation Tax reduction if you are profit-making.
• a cash credit if you are loss-making
• or a combination of the two.

We can assist in realizing the potential R&D credits available. This scheme is equally available to all business sizes, whether small, medium or large. We can help you identify if your company could claim R&D tax credits. The effect of R&D claims will reduce profit, create a loss or increase the pre-existing loss. Reducing the gain means reducing the taxable income, and increasing the loss means increasing the reliefs.