What are R&D tax credits?

Research and development, also known as R&D, matters for businesses serving all industry sectors. It’s the key to strengthening your organisation as a whole and fostering innovation from within to drive your business to new heights. These are just some of the reasons why many companies choose to invest heavily into the research and development of their organisation and its workforce.

The government recognises the importance of research and development. As a result, there is a plethora of R&D credits accessible to UK companies wishing to develop additional revenue streams, enhance their understanding of their respective markets, and create a foundation that enables them to reach their full potential.

In this blog post, we delve deeper into R&D tax credits to reveal exactly what they are, which types of businesses can access them and how your organisation can benefit.

An introduction to R&D tax credits

As the name suggests, R&D tax credits are tax reliefs that could save money on every eligible investment made by your company into a research and development project. They provide a source of significant savings for businesses looking to boost innovation through the development of new products, processes and services, the hiring and education of staff, and the enhancement of existing procedures.

R&D tax credits are available as cash payments or can be claimed as a Corporation Tax reduction to free up essential funds for use throughout other areas of your business.

Who can claim R&D tax credits?

R&D tax credits are designed to aid organisations that strive for innovation through science and technology. But they aren’t strictly reserved for companies within the science and technology sectors. Any business with an eligible research and development project that’s designed and executed to research or develop an advance within their field can claim R&D tax credits.

To obtain R&D tax credits, you must be able to explain how your project has identified an advance in science or technology, overcome or attempted to overcome uncertainty, or could not be easily deciphered by a professional in these fields. Both successful and unsuccessful R&D projects may be eligible for R&D tax credits.

Which types of reliefs are available?

The R&D tax credits available are dictated by the size and/or turnover of your company. Each relief can provide a significant reduction in qualifying R&D costs so you can enjoy more of your profits elsewhere within your business.

To find out more about R&D tax credits and for further details on how to claim, search for a local accountant who can help.