What is R&D Tax Relief and should I claim?

R&D Tax Relief Explained

Despite being on the tax statute since 2000, Research & Development Tax Relief remains an often overlooked and frequently misunderstood piece of tax legislation, but correctly applied for, it can offer a massive cashflow boost to your business through an R&D Tax Credit.

In principle ANY COMPANY could claim R&D Tax Relief, it doesn’t matter what industry you’re in or whether you employ staff or work with contractors. If you are working on a defined project and that project involves the overcoming of Scientific or Technological challenges, then you could be claiming. It could be specific to you your industry, a new or improved product, or it could be the development of a new in-house IT System that has been tailor made to your unique requirements.

Despite the ongoing furore around “Tax Avoidance” and “Evasion”, Research and Development Tax Relief is government approved tax avoidance. What is more as part of their efforts to make Britain the Innovation nation they are “actively encouraging” small businesses to claim.

In order to qualify for R&D tax relief, your business needs to be able to demonstrate that the advance your project was trying to achieve within the field was significant and couldn’t easily be achieved by another professional within the industry.

If you have an eligible project you can claim tax relief on a number of costs:

Material costs – if you are developing a prototype or you incur costs for software or utilities needed to run the project

Third Party costs – payments to subcontractors for Research/Development activity or the costs of hiring workers through an agency to bring in specialist help for support on a project.

Staff costs – wages & salaries, bonuses, pension contributions and Employers NI contributions


Cooden Tax Consulting’s director Simon Bulteel has recently been recognised by Enterprise Nation as one of their Top 50 Advisers to SME Businesses.

If this article has prompted any questions you can call Simon, at Cooden Tax Consulting on 01424 225345

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