Research and Development (R&D) relief is for companies that work on innovative projects within science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. To qualify for R&D relief the project does not need to be successful.
What relief can be claimed?
Small or medium-sized enterprise (SME) R&D tax relief allows companies to:
- deduct an extra 130% of their qualifying costs from their annual profit, as well as the normal 100% deduction, to make a total 230% deduction
- claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss
How to qualify for SME R&D tax relief ?
- You are SME, that is:
- less than 500 staff
- turnover of under 100 million euros or a balance sheet total under 86 million euros
(You may need to include linked companies/investments and partnerships when you work out if you’re a SME)
- Meet the governments definition for R&D relief:
To qualify for R&D relief you will need to cover how your project:
- looked for an advance in science and technology
- could not be easily worked out by a professional in the field
- had to overcome uncertainty
- tried to overcome this uncertainty
You can claim R&D relief if you research or develop new processes, products or services or improve on an existing one.
What costs can be claimed?
You can claim certain costs on the project from the date you start working on it until you develop or discover the advance, or the project is stopped.
- Software (i.e. software licence fees)
- Consumable items (i.e. materials, utilities and clinical trial volunteers)
- Employee costs (i.e. salaries, Class 1 NIC and pension fund contributions)
- Subcontractor costs (the amount that can be claimed for Subcontractor costs is restricted to 65%)
What costs are exempt?
You cannot claim R&D tax relief for:
- the cost of patents and trademarks
- rent or rates
- the production and distribution of goods and services
- capital expenditure
- the cost of land
If you would like to know more information about R&D Tax Relief for SMEs and whether you qualify, please contact a member of our team who will be happy to assist. Here at Q Accountants, we provide and cover a spectrum of tax services, including R&D Tax services which is led by our very own R&D Tax Specialist who will assist you throughout the claim process.