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Did you know your company can receive significant tax credits if it does R & D, and especially if it’s an SME?

The UK Government has run the Research and Development Tax Credit scheme since April 2001 which offers 150% rate of enhanced deduction from SME’s and 125% rate of enhanced deduction for large companies. A large company being in this context one that employs more than 250 people has an annual turnover of 50M or a balance sheet of €43M.

There has already been 17,000 claims made and £1.3 billion support claimed.

So what qualifies as R & D?

(a) extend overall knowledge or capability in a field of science or technology; or

(b) create a process, material, device, product or service which incorporates or represents an increase in overall knowledge or capability in a field of science or technology; or

(c) make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes; or

(d) use science or technology to duplicate the effect of an existing process, material, device, product or service in a new or appreciably improved way (e.g. a product which has exactly the same performance characteristics as existing models, but is built in a fundamentally different manner)

will be R&D for tax purposes if the project seeks to achieve an advance in overall knowledge or capability in a field of science or technology, not a company’s own state of knowledge or capability alone.

If you are outside of the UK, I have heard of a couple of companies that have moved part of their R&D shops to the UK to take advantage of this and other benefits the UK has to other such as development zones, industry grants and access to highly skilled and trained staff.

More details can be found here.

It’s not often that we get money back from the tax man for doing the job we love so take advantage of this little heard of scheme if you can.

Posted on Tuesday, September 19, 2006 7:52 AM Main | Back to top


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