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.
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.