Research and Development


What comes to mind when you hear the term research and development?

Men in white coats, with black spectacles, hovering over microscopes?

If that is the case you may be in for a surprise!

R & D is not limited to laboratories. If you run a business in the field of IT, food technology, construction, software, electronics or communications than you may maybe undertaking R & D without even being aware of it.

If you think that this is the case you are missing out on valuable source of tax relief.

The government is keen for entrepreneurs and business owners to “push the boundaries” and have subsequently laid out very generous tax reliefs.

For instance if you are an ‘SME’ (small medium enterprise – employing less than 500 people or a balance sheet of gross assets not exceeding £86m) than you could qualify for a reduction of 230% on certain costs incurred in research and develop.

Alternatively the HMRC allows you to surrender any losses to receive a tax refund of 14.5% (£33.35 for every £100) spent on qualifying expenditure.

Qualifying expenditure can include staff costs, consumables associated with the project, software and workers who may have to be drafted in.

Qualifying expenditure does not include capital expenditure, but this benefits from other tax reliefs.

Example 1

If you work in the food industry and have been inspired to create a new taste of alcohol or food and have had to develop the technology to do it.

Example 2

You own an IT company and need to construct a costing and processing system to measure the expenditure and progress of external client work.

Remember a project does not have to be a success to benefit from R & D tax relief!

If you want to be the next Richard Branson or James Dyson  – than remember the letters R & D and get in touch with us at Calcutt Matthews – we would be happy to advise you on the potential tax relief to your business.

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