Your company can claim R&D Relief if they have an R&D project that seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty, not just an advance in its own state of knowledge or capability.
The project must be related to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.
In order to see whether your company could qualify, please check the following guidelines:
Project – it must be a separately identifiable and commercially viable project.
Advance in science or technology – what scientific or technological advance is being sought? This focuses attention on the project’s aim for an advance.
Science - Scientific uncertainty exists when knowledge of whether something is scientifically possible or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.
Technology - Technological uncertainty exists when knowledge of whether something is technologically feasible, is not readily available or deducible by a competent professional working in the field.
Directly contribute – you’ll need to show that the persons leading the R&D project are themselves competent professionals working in the relevant field.
Scientific or technological uncertainty – Explain why they consider the uncertainties are scientific or technological uncertainties rather than routine uncertainties.
If a company has fewer than 500 employees and either of the following:
- an annual turnover not exceeding €100 million
- a balance sheet not exceeding €86 million
It qualifies as an SME for R&D Relief.
This means there are higher rates of relief. From 1 April 2012, the tax relief on allowable R&D costs is 225% – that is, for each £100 of qualifying costs, your company could have the income on which CT is paid reduced by an additional £125 on top of the £100 spent. It also includes a payable credit in some circumstances.
Larger Company Relief
Otherwise the large company’s relief is available on allowable R&D costs at 130% – that is, for each £100 of qualifying costs, your company could have the income on which CT is paid reduced by an additional £30 on top of the £100 spent. If instead there is an allowable trading loss for the period, this can be increased by 30% of the qualifying R&D costs – £30 for each £100 spent.