Research and Development Tax Credits

Research and Development Tax Credits support companies that make investment in projects that seek to further technology or create new processes in developing existing products or services. It is designed to encourage companies to invest in new advances in science and technology that will benefit the UK economy.

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The project does not need to be successful to be able to be claimed as an research and development tax credit but it must seek to make an advance in science or technology in the trade that your company works or intends to start working in. To get the research and development tax credit you need to show how a project

  • Looked for an advance in science and technology

  • Had to overcome uncertainty

  • Tried to overcome this uncertainty

  • This uncertainty could not be overcome by a qualified professional in the field.

You may create a new process, product or service or simply improve an existing one to overcome this uncertainty.

The following are costs that may be included in a claim for research and development tax credits

  • Staff Costs

  • Costs of Subcontractors and Freelancers

  • Software

  • Materials and the costs of Utilities used by the research and development project.


There are two schemes for research and development that can be claimed – SME R & D tax credit scheme for companies with fewer than 500 staff and not more than 100 million Euro turnover or 86 million Euro gross assets. The scheme for Large companies called Research and Development Expenditure Credit (RDEC) will be for companies larger than the SME Scheme qualifying criteria.

The type of scheme would affect the amount of relief that is available. For the SME scheme the relief will be 33p for every £1 spent if the company is making losses and 25p for every £1 spent if the company is making a profit. For the RDEC scheme the amount of relief will be 13% of the expenditure on research and development.

If the company is loss making the tax credit can be paid to the company by way of a refund from HMRC and if the company is making a profit the research and development tax credit will be given as a refund in the corporation tax payable.  It may also be given as a combination of the two above.

This is significant in that it gives your company cash that is paid into your bank account if the refund is claimed or reduces the tax that is paid. It is an essential source of extra funding for your business that is non-refundable. If you need help with a research and development tax credit claim or are curious to see if you qualify please do not hesitate to contact us for further information how we can help your business get access to this funding.

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