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R&D tax relief/incentives

The UK has a strong history of scientific and technological innovation. The government recognises the important contribution that innovation and the exploitation of associated resources can make to economic growth, and offers beneficial tax regimes to support this.

Research and development (“R & D”) tax relief

The definition of R & D is much broader than many businesses imagine and we have made claims for clients in a variety of sectors, including manufacturing, technology, logistics and property & construction.

Profitable SMEs obtain an enhanced deduction of 130%, that equates to tax relief of up to 46% of the qualifying expenditure – effectively reducing the net cost to £54 per £100 of spending.

The regime is particularly beneficial for early stage and loss-making companies, as a payable tax credit can be recovered from HMRC equivalent to 33.35% of the qualifying expenditure – effectively reducing the net cost to £66.65 per £100 of spending.

Download the Menzies R&D Help Sheet PDF.

Large companies and companies undertaking R & D for others

A tax credit is available, equivalent to 11% of the qualifying expenditure. This can be recognised as a taxable item above operating profit in a company’s financial statements, with the net amount of 8.8% payable to the company.

Who can benefit from the R&D regime?

Any company that resolves difficulties or challenges and applies technology or science in doing this, should consider the relief, whether they undertake the work on their own behalf or on behalf of others.

This includes businesses developing new or improved products, processes, services or systems and those that are technology, manufacturing or processing-led.

Specialist R&D Tax Relief Services

Our specialist tax team works with our clients to understand their businesses and to identify beneficial tax planning opportunities including:

  • Considering the potential reliefs available, including Patent Box incentives.
  • Protecting the intellectual property arising, including mechanisms to retain key staff.
  • Identifying qualifying activities and expenditure.
  • Navigating companies through the claims process.
  • Building staff’s knowledge of the regime, to improve project recognition and recording.
  • Developing systems to improve identification and recording of qualifying expenditure.

 
Read more about the future of the Patent Box regime.

Our R&D tax relief experience

In the last two years, we have assisted clients to recover in excess of £10m from HMRC, enabling them to reinvest these funds to drive commercial growth.

To speak to a partner or for more information about the services we offer please contact one of the Menzies LLP offices or complete our online contact form.

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