Tax relief for research and development

There are various tax reliefs available for certain kinds of businesses, but in many cases directors are not taking full advantage of these reliefs as they are not aware that they exist or think the process will be too complex. If the work done at your company involves some form of technological or scientific research and development, you may qualify for R&D tax relief on your expenditures.

In order to qualify for the R&D tax credit scheme, your company activities must fulfil certain criteria. Your research and development work must be “directly contributing” to making advances and resolving uncertainties in the fields of science or technology, or must be a “qualifying indirect activity” which relates to these topics. Your expenses can qualify for R&D relief whether or not you are successful in your aim of resolving uncertainties.

In the last few months, changes have been introduced to the R&D tax relief system. As on November 2015, companies with fewer than 50 staff members and a turnover under £2 million who have not previously claimed the credit can seek advance assurance on their R&D tax relief. This means they will be assured that HMRC will allow them to claim R&D tax relief for up to three years with no further enquiries.

Previously, there was confusion for many companies about whether their yearly R&D expenses qualified for the credit, as their tax returns were filed after the costs were incurred. Assurance removes this uncertainty and makes the process much easier. It is hoped that the introduction of assurance will persuade more SMEs to take up the offer, thereby encouraging valuable research and development work throughout the UK.

This is just one of the possible tax reliefs that may be available for your company, depending on the nature of your business. If you would like advice on how to explore every financial opportunity, our team of North West London-based accountants can provide all the help and advice you need. We will discuss your projects with you and determine whether you qualify for this new three-year tax relief plan, or any other form of tax credit.