What is Research and Development Tax Relief?

by Nick Bonnaud

Birmingham Research and Development Tax Relief Experts

What exactly is Research and Development Relief?

Research and Development Tax Relief (R&D tax relief) is defined as any project that seeks to improve the knowledge and capability of a particular field or area of technology or science. R&D relief is available to companies who carry out qualified Research and Development in relation to their trade. This allows them to deduct certain eligible expenditures from their corporation tax.

The company’s choice of scheme will determine the amount of relief that is available.

Call us on 0121 235 0315 to talk to our R&D tax credit specialists for a free ‘no-obligation’ assessment to maximise your claim and discover exactly what you are entitled to.

SME Scheme for Research and Development Relief

A company now has the option to receive 230% relief on qualifying R&D expenses starting 1 April 2015. In certain cases, loss-making businesses can surrender their losses to receive a tax credit.

Research and Development Expenditure Credits (RDEC) Scheme

A taxable credit of 11% on qualifying Research and Development tax relief expenses is now available as of April 2015. The tax credit can be fully paid for loss-making businesses.

The Research and Development Expenditure Credits Scheme features:

Companies that are not subject to corporate tax liabilities will be able to benefit from Research and Development Expenditure Credits through a cash payment, or a reduction in tax or other duties due.

Payable credit cannot exceed the PAYE/NIC liability of employees who were engaged in qualified activities during the accounting period.

SME can claim Research and Development Expenditure Credits (RDEC) if their subcontractor or sponsor research is done. Group companies can forfeit the RDEC to avoid another company’s CT liability.

Is my company large or small?

Find out whether a company qualifies for Research and Development tax exemption by contacting us at 0121 235 0315 to talk to our R&D tax credit experts for a free ‘no-obligation’ assessment to maximise your claim and discover exactly what you are entitled to.

HMRC look at the following purposes:

* Staff headcount of less than 500

* Either turnover of £100m or total balance sheet (less than £86m).

A company may need to include its data as well as data from a part of another enterprise or a link enterprise. You only have to include your own data if your company doesn’t have any external investors or isn’t part of a group.

Is my company a partner or linked company?

Here are the key rules:

Linked companies

It is considered a linked business if the company controls or is controlled by other companies. For example, it holds more than half of the voting rights of shareholders in another company. It is necessary to add the R&D data of linked companies.

Partner companies

A company that owns more than 25% of its company or 25% of the assets of another company, is considered to be a subsidiary.

Some types and companies of investors cannot be considered partners.

To the Research and Development Expenditure Credits (R&D) data, a proportion of data from partner companies must be added. If the partner company has 30% control of the Research and Development business, then add 30%.

Check out our FREE R&D tax credits calculator to get an estimate of what you may get.

Call us at 0121 235 0315 to talk to our R&D tax credit specialists for a free ‘no-obligation’ assessment to maximise your claim and discover exactly what you are entitled to.

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Call trusted Birmingham accountants Quest on 0121 235 0315 for free tax and business advice. Lets have a chat about how we can help you pay less tax and grow your business 🙂

If you want to discover how we can help your business, Quest also offers the following services: VAT, Payroll, Business Tax, Tax Services, New Business, Self Assessment, R&D Tax Credits, Tax Deadlines and Annual/Management Accounts.