Your R&D tax credit incentive – use it or lose it
As part of their commitment to help Britain become a world-leading hub for innovation, the Government offers small- and medium-sized businesses a special Research and Development (R&D) tax credit that can be used to reduce the annual Corporation Tax bill. Now in its 15th year, the R&D tax credit allows smaller businesses to claim up to 230% of eligible costs against profits.
How do I qualify for the R&D tax credit?
There are three key criteria to defining eligible R&D spend. Your project must:
- Set out to generate an advance in science or technology.
- Be designed to overcome a scientific or technological uncertainty.
- Be conducted in a systematic and thorough fashion (like any other corporate project).
Not every R&D activity is covered by the scheme, so you should always check with your accountant.
Applying for tax relief
At year end, your business needs to submit a special CT600 tax return to claim the accompanying tax credit. R&D tax relief is not automatically applied, so if you fail to complete the appropriate claim forms, you will lose out of free money from HMRC. You will also need to keep adequate records that provide a coherent audit trail of expenditure.
With the tax man offering healthy incentives for investment in improving your business operations, products and services, there is no reason not to spend on new projects. If you need further help and advice about qualifying projects or how to claim your tax credit, get in touch with our team of specialist tax accountants today.
