Research & Development

If your company is involved in research and development projects for each £1 of relevant expenses incurred the government can allow up to £1.25 in additional expenses to be deducted from your profits in arriving at the amount chargeable to tax. The typical types of expenditure that qualify for this relief are as follows:

  • Employee costs
  • Materials
  • A proportion of utilities
  • Software used
  • A proportion of subcontractor costs
  • Certain capital expenditure

Although the project must relate to your company’s trade you need only demonstrate that the project seeks to achieve an advance in overall knowledge or capability. The minimum spending limit of £10,000 was removed from 1/4/2012 meaning your company could be entitled to claim even if your expenses are minimal. A company can make a claim for the current and preceding year providing that the claim is made within two years from the end of the earlier period. If your research and development claim results in your company making a taxable loss it may be possible to surrender this loss for a cash repayment of £0.11 per each £1 of loss made.

The Patent Box

New legislation was introduced from 1st April 2013 that can allow a company to pay tax at a reduced rate of 10% on it profits derived from patented innovations and inventions.

If your company is involved in research and development or owns licensed patents and makes profits from exploiting them contact us today on 0845 345 7785 for an initial assessment on whether you could be entitled to claim or pay tax at the reduced rate.

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