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Is Your Company Eligible for the R & D Tax Relief?

July 14, 2016 | Author: | Posted in Taxes

There is an urgent need in the global system to promote new research and development in all the fields. It is the responsibility of the government to promote this kind of development. With a constant urge to have sustainable growth, the government has some schemes that help companies and business that help in providing such sustainable growth in the economy. One such scheme that is introduced by the UK government is the R & D relief – Research and Development Relief.

Read on to find out all you need to know about the R & D relief.

What is R & D relief?

As the name indicates, it is a relief for business units from paying an exuberant amount of tax to the government.  This scheme was introduced by the government to encourage businesses that are developmental, research-oriented and creative in nature.

There are two important aspects of R & D Tax relief that you ought to know. First is, you can claim for R & D tax credit from the HMRC for all the research and development activities that your company is performing. Secondly, you can avail a relief from the losses that you procure due to your R & D activities with the help of this scheme.

What qualifies as R & D activities?

The projects that are related to R & D tax relief have to qualify for the same. R&D for tax purposes are the projects that seek to achieve an advancement in the field of science or technology. The activities which directly contribute to achieving this advancement through the resolution of scientific or technological uncertainty qualify as R&D. Certain qualifying indirect activities related to the project are also R&D. Activities other than this – like arts, humanities or social sciences do not qualify as R & D and hence cannot avail the R & D tax relief.

How to avail this facility – the terms and conditions!

You should be a regular corporate tax payee. A minimum of 2 years is required prior to availing this facility.  It does not matter if your company is a SME (Small and medium sized enterprise) or it qualifies as a large company. Even start-ups are eligible to avail this facility – provided you are able to prove that your business is research and development oriented. However, the SMEs benefit more from this scheme by availing for the SME R & D tax relief.

While filing your corporate taxes, you need to mention if your company is a large company or an SME availing this facility. It is also good, if you could provide details of your research activities and the costs incurred for the same at the time of filing for your taxes.

Good to know

If your company qualifies for the R & D relief, these are the following items on which you could claim your relief :

Staff costs

Contractors, sub-contractors and utility costs

Material costs to run the business

Software costs (used directly for R & D purposes)

However, all other costs that are incurred indirectly for your project cannot be claimed with this scheme.


Swanson Reed, UK’s leading specialist in Research and Development (R&D) tax relief advisors that helps start-ups, small & mid-sized businesses, and large innovation companies claim R&D tax credit and incentives by the HMRC. To learn more about us, visit

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