What Are R&D Tax Credits?

Some of the main points explaining R & D tax credits:

Investing in R&D is money in the bank

• R & D Tax Credits were introduced for SMEs in April 2000 and for large companies one year later.
• They apply to limited companies and credits can be offset against Corporation Tax or, where there are no profits, a cash credit is available – all subject to qualifying conditions being met.
• Since April 2012, qualifying expenditure can be treated at 225% of value for Corporation Tax computations.
• Prior to 9th December 2009 an SME had to own the resulting intellectual property of R&D in order to qualify. From that date this condition no longer applies.
• Qualifying costs can be internal labour costs, a proportion of sub contracted R&D work and qualifying direct consumable costs.
• Claims must be made within two years of the financial year end in which they were incurred – unless R&D costs have been capitalised then written-off later. In that case the claim must be within two years of the year end when the costs were written-off.