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Research & Development

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From April 2012 companies that spend money on R & D can claim up to 225% of their expenditure against their taxable profits (up to 200% for any expenditure pre April 2012).

This means that for every £1,000 of qualifying expenditure, a company paying Corporation Tax at the lower rate of 20% could save up to £450 in tax.

You might think that this generous relief is only for the big medical companies and boffins in white coats, but you’d be wrong! It can be claimed by any size of company as long as they incur costs in trying to improve a product or service through a technological advance. The claimant doesn’t even need to own the Intellectual Property Rights.

The claim for relief can be particularly valuable to start-up companies or companies in their early years. Where a company has a trading loss, it can make a tax credit claim which could result in the company getting tax credit payments even when no Corporation Tax has ever been paid!

Given that HMRC believes that there are well over 150,000 SMEs in the UK that have not taken advantage of the reliefs available and with the average claim being £40,000, that equates to £6bn potentially going unclaimed!

So what companies can qualify?

The most common claims and the typical companies that overlook their right to claim are:

  • Electronics and electrical engineers
  • Mechanical engineering
  • Product design
  • Food and drinks industry
  • Life sciences
  • Software and games developers
  • Packaging and print companies
  • Environmental waste
  • Manufacturing

The expenditure need not solve a problem, find a solution or create something new or innovative. It is merely the attempt to do so that is the qualifying activity.

R&D Tax Relief is a very complex subject. Please call 0141 332 6331 or email if you believe that you or a company you know may be missing out on a potential claim.