What are R&D Tax Credits?

Research and Development Tax Relief is a government incentive designed to financially reward UK companies for developing new technologies and substantially improving products, processes, devices, materials and/or services.


To promote a greater investment in innovation and stimulate economic growth, businesses of all sizes are able to claim tax relief on costs incurred by qualifying research and development activities.


R&D tax credits can be a valuable source of funding for many businesses - the average annual claim for an SME is over £46,000.



Who is eligible?

Many businesses assume that they are not eligible for R&D Tax Relief, as they are not aware that they are undertaking qualifying research and development activities.


The scheme is available to virtually every industry, and any business which is undertaking some form of innovation may be able to qualify.


Another common misconception is that R&D tax credits are only available if the company has developed something completely new, from scratch. However, if R&D work has been undertaken to make significant improvements to existing products or processes, this may also qualify. Even unsuccessful R&D work can be included - as long as it aimed to achieve a scientific or technological advance.


There are separate schemes for SMEs and 'Large Companies', and even companies which are not making a profit can apply. Each case must be looked at on its own merit to identify any qualifying activity and analyse accounting records to establish how much expenditure is eligible.