Complete Guide To Corporate Finance

The Business Finance Guide


R&D stands for Research and Development. As you very well know, research and development is essential for advancing technology and growing a business. Intel is just one example of a company that has committed itself to R&D. You do not have to be a big company though to receive R&D tax credits. Any company that is willing to invest in innovation is eligible for research and development tax credits. Cash payments and tax reductions for money expenditures are offered to large and small companies alike. The size of the company does not matter. What matters is the investment in R&D. If you are worried that your business will not qualify for R&D tax credits, it is worth continuing reading.

What qualifies as R&D

The goal of the UK government is to increase research and development by reducing the cost and encouraging companies to invest money in innovation. For this reason, R&D requirements are broad. If you run a UK-based business and you are working towards innovation, you may just be realising qualifying activity. Activities that are classified as research and development are:

  • Creation of potential new products, services, processes that involve extensive research
  • Modification or alteration of an existing product, service, process

Is your business eligible for R&D tax credits?

If you are still in the clouds or you simply do not know if your project is eligible for research and development tax credits, it is a good idea to consider the following aspects:

  • Where your company is officially registered. Your company has to be set up and, most importantly, registered in the UK. Tax incentives are offered only to UK-based businesses.
  • If you have spent money on R&D. If you have not spent corporate money on research and development, you should not even dare to submit a claim to the HMRC. Costs like direct labour, R&D consumables, and external personnel qualify as research and development expenses.
  • You are not profitable. Businesses can claim R&D tax credits if they have or not have been profitable. The fact that your project has not been lucrative does not disqualify you.

Industries that qualify for the R&D tax credits

  • Engineering
  • Architecture
  • Manufacturing
  • Agriculture
  • Construction
  • Software
  • Food and beverage

It does not matter what market or sector you serve as long as you are committed to innovation and growth.

If you are looking for a solution to reduce your tax bill and increase taxable losses, you should claim your research and development tax credits one of the most overlooked tools. All you have to do is identify the right scheme and send your claim over to the HM Revenue and Customs. What you have to remember is the fact that you are likely to receive a cash credit that is worth about 33% of your business’ costs on R&D. Simply put, it is an opportunity that you should take advantage of. To make things easier for you, seek the help of professionals. There are companies out there that can assist you with the claiming process.


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