Research and development tax credit

Research and development tax credit for loss-making Small and Medium-sized companies will increase from 11% to 14.5% from 1 April 2014. This may not seem like a like a generous relief, however, since April 2012 the R&D Tax Relief scheme allows an enhancement for qualifying expenditure of 125%, so a company spending £10,000 on qualifying R&D can treat this as though they have spent £22,500.

This will mean that a company carrying out qualifying R&D that doesn’t have a Corporation Tax liability could receive £3.26 from the Government for every £10 spent on qualifying R&D.

R&D tax relief can be claimed for a much wider range of activities than most business owners realise, it is intended as a financial reward for technical developments that aim to deliver improved product, process, device, material and/or service.

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