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R&D Tax Credits

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Many companies are unaware that they may be eligible for R&D tax credits if they undertake R&D. For example, companies who undertake a Knowledge Transfer Partnership with the University Of Westminster can claim tax credits as a result of this collaboration.

R&D tax relief is the biggest single funding mechanism for business R&D provided by the Government. This tax relief can help fund the technological advances you need to keep your company competitive, by reducing your tax bill or providing you with cash. Over 4,500 small and medium-sized (SME) companies are claiming more than 250m each year in R&D tax relief from HM Revenue and Customs (HMRC).

How can R&D tax credits help you?

Companies carrying out R&D work in technology or science are entitled to a deduction when calculating their taxable profits of 150% of qualifying expenditure for SMEs, and 125% of qualifying  expenditure for larger companies. In some cases SMEs can receive a cash refund of tax losses of 24% of the R&D eligible costs.

What qualifies as R&D?

To be entitled to either R&D tax relief or payable credits you must be doing work that falls within a special definition of R&D. If you have been doing R&D you should be able to answer these questions:

  • Does your work involve you developing scientific or technological knowledge that isn't commonly available?
  • What scientific or technological challenges have had to be overcome as part of this work? (These have to be uncertainties that competent professionals can't readily resolve, and where solutions aren't common knowledge.)

Simply buying new technology and using it isn't R&D, but adapting it or developing it for your own purposes might be if it involves scientific or technological advances.

Can I benefit?