R&D tax relief is the government’s way of rewarding businesses that are investing in innovation by developing new,
or improving existing products, processes, services, devices and materials or advancing the state of knowledge in their sector.
The relevant legislation is located in The Corporation Tax Act 2009. Guidance on the meaning of R&D is found in the BEIS Guidelines on the Meaning of Research and Development for Tax Purposes.
There are nearly 6 million companies in the UK. According to HMRC statistics, 2017-18 ended on 62,095 claims, up 17% on 2016-17; SME claims made up 54,005, which is an increase of 19%. So far in 2018-19, there have been 59,265 claims. 52,160 of these are SME claims (as of 30 June 2020), this had resulted in £5.3bn of support across £35.3bn qualifying costs for the same period.
Making an R&D claim
R&D tax relief can only be claimed two years from the end of your accounting period. This means that once your business enters a new tax year, you are no longer eligible to claim for any projects that took place more than two years previously.
Research carried out by Catax found that although around 800,000 businesses are likely to be eligible for R&D tax relief, just 8% are claiming it.
Are you missing out?
How R&D Tax Relief Works