A 230% supercharged tax deduction is available via the R&D Tax Credit scheme to SME’s, while larger companies are eligible for the RDEC scheme. Both schemes are an important government incentive which rewards companies that work on innovative projects. The incentive allows companies to claim up to two years retrospectively for qualifying work done.
The R&D Tax Incentive
CAN I CLAIM
Depending on the size of your business, you will fall into one of two distinct schemes:
- SME R&D Relief; or
- The R&D Expenditure Credit (“RDEC”).
The above schemes will result in either a cash payment or a corporate tax reduction through a supercharged 230% tax deduction. The ultimate benefit is up to 33% of your R&D tax expenditure back in a refundable tax credit.
WHAT IS FUNDED
The incentive can be claimed on most directly attributable R&D costs with certain exceptions.
Examples of qualifying expenditure include:
- Salaries and wages;
- Materials; and
- A portion of your contractors and sub-contractors.
WHERE MUST I
There is currently no geographic limitation to the tax incentive, provided that you are a UK taxpayer.
WHO IS FUNDED
This scheme can be used by any organisation which is liable for corporation tax in the UK and meets the necessary criteria.
The incentive is administered by HMRC.