Research and Development (R&D) tax relief is aimed to encourage companies to invest in innovation. For companies developing products, processes and services, R&D tax relief can provide a vital source of funding through cash reimbursement or tax deduction. As it stands, it is one of the biggest tax reliefs available to SMEs.
The relief is ultimately geared towards problem-solving businesses. Under HMRC guidelines, R&D is a project or activity, which “seeks to achieve an advance in science or technology [through] the resolution of scientific or technological uncertainty.”
Eligible companies may have carried out the following:
- Looked for a more efficient or more effective solution
- Made improvements to an existing product or created a new product
- Trialled new computer code or materials
- Solved problems or overcame issues for customers and are able to demonstrate an advancement in the sector
Unfortunately, the North East has one of the lowest claim rates in the UK. Primarily due to misconceptions surrounding the relief and a general lack of awareness from both accountants and companies.