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What is R&D Credit?

R&D tax credits work through two different schemes, one for large companies the other for smaller companies that have less than 500 staff and turnover less than £100 million.

The scheme for small companies allows the firms to deduct an extra 130% of their qualifying costs from their annual costs, so the allowable deductions will be a total of 230% of qualifying costs. So, for example, £100 of qualifying expenditure will mean that £230 can be claimed as deductible. Note that if your company is making a loss then you can claim a tax credit worth up to 14.5% of your loss.


If you are deemed a large company, then you will qualify for large company R&D tax relief. This provides 12% relief of your qualifying R&D expenditure.


To qualify for R&D tax credits you must be:

· Limited company in the UK which is subject to corporation tax.

· Have carried out applicable Research and Development

· Demonstrate that you have spent money on R&D activities


The scope of R&D tax credits is wide and any cost which you can show directly relate to R&D activities can qualify, including salaries, software, materials or infrastructure. It can apply to a company operating in any sector and may be back dated to earlier accounting periods.

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