Opportunities To Claim

Significant tax reliefs and credits are available for expenditure on research and development (R&D). Not all R&D qualifies, but the definition is much wider than is often thought, and the relief is available to many businesses outside the traditional research industries such as pharmaceuticals.

Until 31 March 2008 there was an opportunity to remedy missed R&D tax relief claims before the six year time limit to claim R&D tax relief was reduced to only two to match the time limit to claim the R&D tax credit (for accounting periods ended after 31 March 2002 but before 31 March 2006 any R&D tax relief claims had to be made by 31 March 2008).  Therefore, it was essential that companies should ensure their R&D tax relief claims were up to date or any tax relief would be permanently lost.  From 1 April 2008 the window to claim is two years from the end of the accounting period in which the R&D expenditure was incurred.

Depending on the size of the business, the following relief is available:

• In certain circumstances, a cash rebate of £2,450 for every £10,000 spent on R&D may be claimed from HM Revenue, even if no corporation tax has been paid;
• From 175% (small or medium-sized enterprizes) down to 130% (large companies) for revenue expenditure expensed through the profit and loss account;
• 100% for capital expenditure (for example, research facilities and equipment).