R&D Tax Relief
R&D Tax Relief
UK companies can benefit from a tax relief or cash benefit of 20% of their qualifyingR&D expenditure, while R&D-intensive loss-making SMEs may access an enhancedpayable credit on qualifying expenditure of 27% as a cash payment.If your business is solving scientific or technological problems that competentprofessionals cannot easily resolve, you may qualify for HMRC R&D tax relief.
What R&D Tax Relief Covers
R&D tax relief supports companies that are creating something new, enhancing anexisting product or process, or replicating the performance of an existing solution byovercoming scientific or technological uncertainty.
In practical terms, this occurs when a business identifies a technical challenge andallocates funding and competent professional expertise to investigate solutions that arenot already understood.
Relief applies from the start of the uncertainty through to the point where the scientificor technological uncertainty is resolved.An uncertainty arises when a competent professional cannot, using existing knowledgeor available information, determine whether something is technically feasible or how toachieve it.
Eligible Projects Must:
- Be carried out by a UK company, eligible for corporation tax.
- Aim to extend knowledge or capability in a field of science or technology.
- Seek to create, improve or replicate the effect of a product, process or service.
- Involve an uncertainty that a competent professional could not readily resolve at the outset.
- Involve financial commitment to research, testing and analysis.
What Costs Can Be Claimed
provided workers (EPWs) directly involved in the R&D work.
2. Subcontractors & Overseas Restrictions
• For accounting periods beginning on or after 1 April 2024, contracted–out R&D
must be carried out in the UK (except for Northern Ireland companies under the
high intensity scheme).
• The company that decides to undertake the R&D is the company that can claim
• You may include 65% of costs paid to an unconnected subcontractor, or up to
100% for a connected subcontractor.
3. Consumables
• Materials, components and items used up or transformed during R&D activity.
4. Software, Data & Cloud Services
• Software directly used for R&D.
• Data and cloud computing costs including data storage, computer resources,
operating systems, software platforms and eligible data sets.
5. Utilities
• Power, water and fuel directly consumed in R&D work
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