R&D Tax Relief is a government initiative that encourages innovation and increased spending on R&D activities by providing a potentially significant corporation tax benefit.

There are two schemes depending on the size of your business. A company would qualify for the SME scheme if:

• You employ under 500 staff and
• Either your turnover is less than €100 million or the company’s balance sheet is less than €86 million

Any business exceeding the above would fall into the “large company scheme” for R&D purposes. Under this scheme, you could claim up to 10p for every £1 of qualifying expenditure.

For profit-making SMEs there is an average tax benefit of up to 16.5% - and the average claim made under this scheme so far in the year 2022/23 is worth £36,000 in cash. Loss-making SMEs can also benefit by claiming up to 19p for every £1 of qualifying expenditure as a cash payment.

UK businesses that incur expenditure developing new products, processes or services (or even enhancing existing ones) are eligible for R&D tax relief – and this is not limited to any specific sector.

To qualify you must:

• Be a limited company trading in the UK for more than 12 months that is subject to Corporation Tax
• Have carried out qualifying research and development activities
• Have incurred expenditure on these projects