R&D tax credits explained
R&D tax credits explainedRewarding innovation and fuelling growth, R&D tax credits have the power to transform your company.What are R&D tax incentives?Research and development (R&D) tax credits are a government initiative designed to reward UK companies for investing in innovation. They are a valuable source of cash for companies to invest in speeding up their research, hiring new staff, and ultimately growing.How to treat a tax credit in R&D do R&D tax credits work?Businesses that invest developing new products, procedures, or services; or enhancing existing ones are eligible for R&D tax relief. If you’re spending money on your innovative efforts, you can make an R&D tax credit claim to receive either a cash payment and/or Corporation Tax reduction. The range for identifying R&D is huge – in fact it exists in all sector. And if you’re filing a claim for the first time, you could typically claim R&D tax credits for your last two completed accounting cycles.Is my company eligible for R&D tax incentives?To take advantage of R&D tax incentives, you must:Be a limited company in the UK that is subject to Corporation Tax.Conducted eligible R&D activities.Invested in these initiatives.Who qualifies for R&D tax credits?R&D can take place in any sector. It is present in various fields including food production to chemical engineering, production and construction to renewable energy.What counts as R&D?The government’s R&D criteria are intentionally wide. Whatever size or sector, if your business is taking a risk by attempting to ‘resolve scientific/technological unknowns’ then you may be carrying out qualifying activity. This could include:Creating new products, procedures, or services.Modifying or altering an current product, procedure, or solution.If you’re not sure if your project is possible or you’re unsure how to accomplish it practically, you could be resolving technological uncertainties and be carrying out eligible R&D.Within the government’s accepted research and development definition, R&D does not need to have been successful to be eligible.
