What is Research and development tax relief?

UK government is providing huge relief in taxation those companies who want to develop new services and ideas.

The UK Government recognises that encouraging innovation is a vital component in a strategy for improving the UK’s productivity

UK government is giving a relief in tax those companies who want to develop new services or manufacturing new products. It is up to 33 percent of investing cost.

It is a huge relief in tax which provided by government to organization for the research and development cost.

Research and development (R&D) tax credits are a valuable government tax relief that rewards UK companies for investing in innovation. Companies that spend money developing new products, processes or services; or enhancing existing ones, are eligible for a cash payment and/or Corporation Tax reduction.

There are different types of R&D relief depending on the size of your company and whether the project has been subcontracted to you or not.

Small and medium-sized enterprises (SME) R&D Relief:-

You can claim SME R&D relief if you’re an SME with:

>less than 500 staff
>a turnover of under €100m or a balance sheet total under €86m

You may need to include linked companies and partnerships when you work out if you’re an SME:-

SME R&D relief allows companies to:

>deduct an extra 130% of