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Research and development tax credits

Updated: Apr 5

R&D tax credits offer a tax relief which can be a vital lifeline for many companies and help fund further development in the firm or be used elsewhere.

However, many businesses are not aware of this tax rebate, or do not believe that the work they undertake qualifies.

How much can businesses claim?

Eligible businesses can claim back up to 230% tax deduction on the amount they have spent qualifying R&D expenditure. There is no longer a minimum amount that can be claimed, so projects of any costs are eligible as long as it fulfils the criteria.

Furthermore, this is redeemable even if the business makes a loss; they can claim a cash payment from HMRC.

What qualifies for Research and Development tax credits?

Work which qualifies for Research and Development Tax Relief must be part of a specific project to make an advance in science or technology. R&D into pure mathematics also qualifies. Projects must relate to a company's trade, either an existing one or one that the company intends to start up based on the results of the R&D. The company itself does not necessarily need to work in the science or technology industries.

Companies must be UK registered, and from April 2023, the R&D work must be undertaken in the UK with some specific exceptions.

When should you make a Research and Development claim?

Claims can be made within two years of the end of the accounting period following the project's completion date. This will change from April 2023, after which you must pre-notify HMRC of a claim and the time limit reduced to 6 months after the end of the period to which the claim relates.

As a result of this change, it is vital that companies that are already undertaking R&D eligible work, or might be considering in doing so, claim the tax credit as soon as possible. As your accountants and business growth partners, PKPI can act for our clients and notify HMRC for you.

R&D tax credits can be a valuable relief to a business, freeing up more money for other investments into the business. Businesses undertaking R&D activities should not be deterred from using this resource, and seeking insightful and trustworthy advice from experienced tax advisors has ensured many of our clients have assembled a robust claim.

If you would like to discuss how we can assist you, get in touch here. We are happy to provide a no obligation consultation to check your eligibility and identify any tax savings.


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