R&D tax relief provides qualifying companies with up to 225% tax relief on R&D costs. Companies that expend money on R&D can benefit from this relief even if they are not liable for corporation tax.
Clients often fail to recognise R&D expenditure that qualifies for tax relief, sometimes in the belief that it only applies to pure research of the type carried out in laboratories. However, any project that seeks to advance knowledge or capability in a field of science or technology could qualify as R&D, especially where it leads to the creation of a new product or just an improvement in an existing product or process.
To qualify, the expenditure must be revenue expenditure and must exceed £10,000 in an accounting period. Typically, the expenditure is made up of staff costs, consumables and utility costs incurred directly in the R&D process. Subcontracted R&D costs can also contribute, though at a reduced rate.
Although there is no requirement for patentable developments to result from the R&D, the creation of patentable inventions is often a strong indicator that qualifying R&D has been carried out. Our patent attorneys work with clients to ensure that the benefits of R&D tax relief are not overlooked, and we can introduce clients to experienced accountants or other advisers with the expertise to help them benefit fully from the reliefs available.