Is your company innovating?
Research and Development (R&D) tax credits provide extremely favourable tax reliefs for companies who engage in innovation. It is not just relevant to technology companies and qualifying R & D can be found in many different industries. Claimants are entitled to enhance tax reliefs and in certain cases can receives cash back from HMRC.
A company can claim R&D tax reliefs on qualifying expenditure incurred on a qualifying project. There are two separate regimes, the SME and the large company regime.
The SME regime allows for a 230% deduction for qualifying costs against profits chargeable to corporation tax. This represents a cash saving of 43.7p per £1 of spend on R&D from 1 April 2016. If the R&D claim results in a loss for corporation tax purposes that loss can be surrendered for cash at a rate of 14.5%, giving a 33.35p payable credit per £1 of R&D spend.
The large company regime provides a 130% deduction for qualifying costs. The large company regime also provides for a R&D expenditure credit (“RDEC”) as an alternative to the main 130% relief.
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