R&D Tax Relief - Does your business qualify?
Research and Development Tax Relief (R&D) is a relief that businesses may be able to claim if they incur expenses whilst developing or enhancing existing products, services or processes.
Many different businesses can claim R&D relief if they seek to research and develop an advancement in their field. In addition, businesses can also claim relief on unsuccessful projects.
A business needs to consider the following to determine if the project is eligible for R&D relief:
- Looked for an advance in science or technology
- Had to overcome an uncertainty
- Tried to overcome the uncertainty
- A professional could not easily work out a solution
Small and medium sized enterprises (SME) Research and Development Relief
SMEs can claim Research and Development Tax Relief if:
- There are less than 500 staff
- The turnover is under 100 million euros, or the balance sheet total is under 86 million euros
Companies can deduct a further 130% of their qualifying costs from the yearly profits. In addition to the normal 100% deduction, equaling a 230% deduction.
An SME that makes a loss can claim a tax credit of up to 14.5% of the surrenderable loss.
Qualifying Costs
- Employee costs
- Subcontractor costs
- Software
- Consumable items
- Clinical trials volunteers
Non-qualifying Costs
Meanwhile companies cannot claim for:
- Cost of land
- Rent or rates
- Cost of patents and trademarks
- Capital expenditure
- Production and distribution of goods and services
Research and Development Expenditure Credit
R&D Expenditure Credit (RDEC) is available for large companies working on R&D projects.
SMEs and large companies can also claim RDEC if they’re subcontracted to do R&D work for a large company. RDEC is a tax credit at 13% of the qualifying R&D expenditure.
Is your business eligible?
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This guide is an informative piece and does not constitute tax advice for individual matters.
