R&D tax relief and credits are a great way to boost your finances by claiming back money you’ve already invested to fund future growth. But if you’re new to R&D, you may be unsure of how to submit a claim and what qualifies as eligible R&D expenditure.
There are two types of R&D schemes: SME R&D relief and Research and Development Expenditure Credit (RDEC). Which type your project(s) qualifies for generally depends on your business size and whether you’ve been in receipt of any grants and/or subsidies.
SME R&D relief lets you claim an additional 130% of qualifying project costs from your annual profit if your business:
Large companies can’t claim this, but can claim under RDEC regime. This taxable credit provides Corporation Tax relief – 12% can be claimed on qualifying R&D expenditure made after 1 January 2018 (11% before this date).
RDEC can also be claimed by businesses that have been subcontracted to carry out R&D by a large company, regardless of their size.
First determine which category you fall under. If you have a partner or linked company,
you may have to also take their data into account.
To claim the correct amount of relief, work out the exact start and end dates of the project. You can make backdated claims for previous qualifying projects – these can usually go back two years after the end of the accounting period they were in.
In most cases, HMRC will deal with your claim within 28 days of receiving it.
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