Capital Allowances

R&D tax relief (or ‘R&D’ for short) is a government incentive that has been around for more than 20 years. It aims to encourage innovation by UK companies and investment in industries that are highly technological.

Any company that is liable to UK corporation tax can claim R&D tax relief, but it needs to be sure that it is undertaking qualifying activities, which can often be the biggest challenge for businesses looking to put together claims.  If you’re unsure if that’s you, just get in touch and we’ll help you establish your eligibility.

The rules governing R&D tax relief stipulate that, for a claim to be valid, a business must be seeking to achieve an advance in a particular field of science or technology and must be doing so through the resolution of scientific or technological uncertainties.

This can include developing new products, services, or solutions (or making appreciable improvements to existing ones), but claimants should be aware that the advance is measured against the baseline of the underlying technology rather than what exists in the industry or the company’s own knowledge alone.

The rates of relief have been changing recently – for expenditure up to 31 March 2023, SMEs were able to obtain a cash credit worth up to 33.35% of its qualifying expenditure, but this has fallen to 18.6% for costs incurred from 1 April 2023 and falls again to 16.2% from 1 April 2024.

The benefit for large companies is increasing as the scheme is rebalanced, with benefit rates climbing from 10.5% for expenditure incurred up to 31 March 2023 to 16.2% for costs incurred thereafter.

To help understand what you might be able to claim, feel free to get in touch.