R&D Tax Relief

R&D Tax Relief provides enhanced tax relief for companies within the charge to UK corporation tax undertaking qualifying R&D.

The definition of qualifying R&D for tax purposes has evolved over the years, but takes its meaning from a combination of the UK accounting principles and additional guidelines prepared by the Department for Business, Innovation and Skills.

The definition is suitably wide so that only a very few activities are specifically excluded, though in essence, any company operating in any industry could potentially qualify for enhanced tax relief, the relief is certainly not limited to those operating within traditional ‘high-tech’ industries.

The requirements state that a company must be undertaking a project which seeks to achieve an advance in science or technology through the resolution of uncertainty. Therefore, if the company is seeking to develop or improve a material, product, service, system or process in a way which may not have been done before, it is likely that qualifying R&D is taking place.

The tax relief is for corporation tax payers only, so individuals or partnerships made up only of individuals cannot qualify.

There are specific rules for the type of expenditure which will qualify for relief, with the bulk of the qualifying costs being made up of staff costs for those engaged in qualifying R&D and includes salaries, bonuses, pension contributions and employer NIC but excludes benefits-in-kind and dividend payments.

Payments to subcontractors, agency staff and other third parties may qualify as well as consumable items including software and utilities.

As with most areas of taxation, there are many complex rules and some quirky nuances which need to be considered. Our experts have the experience and expertise required in differing fields to help your company maximise the relief and our holistic service ensures the relief is not only maximised, but utilised in the most efficient manner. We will work with you and your other advisors to secure the best result.

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