R&D Tax Credits for Innovative Small Companies

15 February 2017

Research and Development (R&D) tax relief for small companies provides an enhanced deduction of 230% for the costs of qualifying R&D revenue costs.

This means that for every £100 of qualifying costs, £230 is deducted from the company’s profits, or added to the company’s trading losses for tax purposes.

• Only incorporated companies can claim R&D tax relief
• The company must have no more than 500 employees, with an annual turnover of no more than €100 million and/or a balance sheet total of no more than €86 million
• You must prove to HMRC that the R&D project contributes to achieving an advance in science or technology through the resolution of technological or scientific uncertainty
• Qualifying costs can include: direct staff costs, consumables, software, payments to clinical trial volunteers
• HMRC can provide Advance Assurance of R&D qualification if the company has never applied before and has fewer than 50 employees and an annual turnover of less than £2 million

You can read our guide on R&D Tax Credits and contact us about becoming more tax-efficient.