What is R&D?

The main definition of R&D for tax purposes comes from guidelines issued by the Department of Business, Innovation and Skills (BIS).

  • R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology.
  • The activities which directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D.
  • Certain qualifying indirect activities related to the project are also R&D.


What are the benefits?

Qualifying R&D spend can be deducted at 225% of the actual cost.

If the company is loss-making, you may be able to claim a payable tax credit of up to 14.5% of the allowable loss.

For example:
Spend £10,000 on R&D and you could claim deductible costs of £22,500, reducing your corporation tax bill by £4,500.
If the company is loss-making, you could be paid up to £3,262.

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