Research and Development (R&D) tax relief works by enhancing the amount you spend on R&D for tax purposes. For example, if you were an SME* and had qualifying expenditure of £100,000 then you would have £230,000 of expenditure for tax purposes. This reduces your taxable profit and in effect increases your tax relief to 46% (based on the full tax rate of 20% from 1April 2015).
The enhanced expenditure can even be used to create or enhance tax losses, which can be offset against profits from the previous year for a tax refund or surrendered to HMRC in return for a cash credit worth 33.35p for every £1 of expenditure from 1 April 2015.
There is also parallel R&D relief for Large Companies at lower rate and a new ‘Above The Line’ R&D tax credit scheme, which was introduced from 1 April 2013. For the transition period from 1 April 2013 until 31 March 2016, a large company can elect to either use the parallel or ‘Above The Line’ scheme.
If your company carries out activities which seek to resolve technological or scientific uncertainties or make technological or scientific advancements you could qualify for this tax relief and contrary to popular belief the relief is not restricted to scientific research or technology companies.
For details of the other conditions that have to be meet and for further details on who is eligible, please contact us using the details at the foot of the page or the contact form
Why choose Essex Abel?
Clients use us to help identify qualifying research and development expenditure, in order to increase tax benefits and reduce their tax bills.
Our experience in this field means that we can help you maximise your claim and minimise your tax payments.
We can provide a complete service, minimising the effort required from you and ensure that you comply with all relevant HMRC requirements. Such an approach helps to reduce HMRC scrutiny over claims.
For our existing clients eligible for this relief, we also act for their Corporation tax affairs and so this can help translate into time and cost savings when combined with our normal compliance services.
If you feel that this is an area which could be relevant to your business then please contact Jason Oram for a free initial, no obligation consultation.
*SME’s are Small & Medium sized Enterprises with up to 500 employees, revenues of less than €100m and gross assets of less than €86m.