R&D Tax Credit

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R&D tax credit consultants

The research and development (R&D) tax credit was introduced over 20 years ago to encourage small to medium sized businesses from virtually all sectors to invest in innovation.

As well as encouraging the development of improved products and services – and therefore ensuring the country’s economy can compete at a global level – the R&D scheme also provides significant tax relief for companies that continue to explore new solutions for the benefit of their colleagues, suppliers, and clients.

Navigating the R&D tax relief scheme’s qualifying criteria can be difficult. The last thing you want to do is waste time pursuing unqualified claims. The team here at A&Z Accountancy has a great deal of experience in applying for R&D tax credits on behalf of UK businesses – so if you are keen to explore your eligibility, contact us for a free, no-obligation consultation.

Frequently asked questions:

How does the SME R&D scheme work?

The R&D scheme for SMEs provides qualifying smaller businesses with a corporation tax deduction of 230% on any money spent on qualifying R&D expenditure.

  • If a company is making a profit, the initiative can be used to reduce its corporation tax liability.
  • If a company appears to make a loss, it will not be required to pay corporation tax and will be eligible for a cash payment back from HMRC. This payment is based on 14.5% of the qualifying R&D spend, multiplied by 230%, or the company’s total trading losses (whichever figure is lower).

Are you eligible for R&D tax relief?

R&D tax credits can be claimed by any UK business that can prove it is undertaking (or has undertaken) qualifying research and development activities.
These can include:

  • Creating new products and services
  • Enhancing versions of existing solutions
  • Filling a gap in the market
  • Responding to an industry-specific challenge

There are certain elements of the research you cannot claim for, but you can generally claim on expenditure such as the cost of your employees and contractors; your raw materials; your utilities; and any software or hardware required to complete the project.

I’m a larger company – can I still apply for the scheme?

There is a separate scheme designed to support larger companies: the Research and Development Expenditure Credit (RDEC).

If you employ more than 500 staff and turn over more than approximately £85 million per year or have a balance sheet total of more than approximately £72 million per year, the RDEC is likely to be the most appropriate scheme for you. Talk to our accountants in London to explore your options in greater detail.

What our clients say

Based in Central London, A&Z Accountancy provides highly personalised accounting and tax consulting services for UK businesses of all sizes, in all sectors.

We can also assist with R&D tax relief claims.
Contact us now to arrange your free consultation online or in person.