Your company is engaged in looking for new and exciting products, but did you know your research and development (R&D) can open the door to a generous tax break? If you didn’t, you’re not alone...


Many potential claims are missed because companies do not realise that they are incurring eligible expenditure. R&D tax relief is a government incentive to encourage companies to invest in R&D activities by claiming relief on qualifying costs. The rates of relief are:

  • 230% of the qualifying R&D costs may be claimed as a tax deduction by SMEs
  • R&D expenditure credit available for large companies giving relief at 9.72%
  • In addition, SMEs may choose to 'trade in' their R&D losses and receive 33p for each £1 spent on qualifying R&D
  • 100% allowances are also available on R&D capital expenditure

But what is eligible R&D? Eligible R&D is work that is undertaken to resolve scientific or technological uncertainty aimed at achieving an advancement in science or technology. 'Advancement' may be the creation of a new product or process, or the improvement of an existing one.

R&D does not need to be successful in order to qualify for the relief outlined above. As long as qualifying R&D has been undertaken then the relief is available. In addition, a company may qualify for the relief even in the situation where the work has been outsourced to a third party.