Research and development can be useful in furthering your business. It can help you keep one step ahead and create some truly innovative products and services. However many companies do not have access to this facility as the funding will simply not allow it; enter research and development tax relief. This tax exemption is designed to help small and medium sized enterprises as well as larger ones operate research and development departments at a low cost.

When looking at research and development tax relief for SMEs, we must first define what counts as an SME. According to the HMRC website in order to be classed as an SME for a research and development tax relief you must have less than ‘500 employees and either of the following:

  • an annual turnover not exceeding €100 million
  • a balance sheet not exceeding €86 million”

One exception to this is if your company is a subsidiary of a larger organisation. If this was the case then the company would be looked at as a whole (including the parent company) and then would not be eligible for research and development tax relief.

If your company is not eligible on the grounds of an SME it may be eligible on the large company scheme. The method for calculating the value of tax relief for a large company is to” multiply the qualifying R&D expenditure by 30 per cent of corporation tax of 24 per cent (2012); this results in a deduction of 7.2 per cent – or £7.20 for every £100 of qualifying expenditure.’

Research and development can cover a broad spectrum of industries but the tax relief is only for specified industries. Generally speaking a company can only claim R&D relief if the project is helping to advance knowledge in the fields of science and technology. The R&D must also be relevant to your company’s trade and under the SME scheme a company must have ownership of any intellectual property that might come from the project.

Research and development is an integral part of any industry and is vital for the further development of business. Although the tax relief facility is out there for companies, not many businesses are aware about it or using it to their full advantage. The exemption can help business to be more competitive without worrying about the costs.

Research and Development Tax Relief is an initiative that uniquely helps both SMEs and larger businesses alike. The initiative has the ability to allow businesses to realise their full potential and to also improve the industry that they are in. This is an opportunity that more and more businesses are taking advantage of, so make sure you are too.

If you are having issues with Research and Development Tax Relief, we at Just Accountants have a panel of selected research industry accountants from around the country who are on hand to help. Our no obligation free service could help you claim various tax benefits. To find out more you can contact us on 0800 0463 690 or email us at for a completely free consultation.

The UK's Leading Accountancy Introducer.

...obligation and cost free.

Find An Accountant