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Understanding HMRC R&D Tax Credits

Read on in this guide and learn as much on the innovation, research and development grants. Learn of the R&D tax credits.

If at all you are established as a corporation, then you need to know of the fact that there are the R&D tax credits are essentially corporation tax relief programs that help lower your corporation or business’ tax bill. If at all you are a small or medium size business, you will have the alternative of going for the tax credits which are often given in the form of cash sums paid by the HMRC. As a matter of fact, there are some basic qualifications that one ought to have met in order to qualify for the R&D tax credits. First and foremost, your firm must be liable for corporation tax. The other qualification that has to be met would be such as the fact that the project that you will have undertaken should be one that actually qualifies for the R&D tax relief.

Moving on, the other issue that needs to be well understood is what kinds of research and development projects would actually be considered to be qualifying for R&D tax credits for tax purposes. For your project to qualify, it generally has to meet the rather detailed criteria set out by the HMRC. In a general sense, qualifying projects would be such that generally help advance science and technology. This project should be one that is actually related to what your business does or intends to do when established, for the startups. For the small and medium size business intending to claim these credits, they need to own intellectual property that may be arising from the project.

As for who qualifies, these research and development tax credits can actually be claimed by both the SMEs and the larger companies. The only thing that must be is that your firm must be liable to the payment of corporation tax.

In as much as the qualification for the credits may sound so simple, the reality is that there are lots of strict rules that will count for what qualifies as expenditure from a taxation perspective. Therefore you see the fact that it wouldn’t be so advisable for you to assume that all items of your R&D expenditure would be qualifying for R&D tax credits. It would as such be advisable for you to ensure that you liaise with an HMRC and R&D tax expert or read the R&D tax relief rules so as to get the guidance on how to make a successful application for these tax credits.

Generally speaking, R&D tax credits can be quite confusing and really complicated for the untrained and for this reason, it would pay for you to think of getting in touch with the pros.

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