What is UK R&D tax relief, and why was the scheme introduced?

What is UK R&D tax relief, and why was the scheme introduced?

Before introducing the Research and Development (R&D) tax relief regime, the UK’s spending on R&D (which was measured as a proportion of Gross Domestic Product) fell short compared to that of many other countries.

To create more jobs, improve productivity, and increase market competition, the UK Government introduced reliefs for companies incurring revenue expenditure on certain types of costs that are directly or indirectly connected to R&D.

According to the statistics that HMRC published in September 2022, which relate to the 2020-21 tax year, the following sectors made up 70% of the total amount claimed: Information and Communication, Manufacturing, and Professional, Scientific and Technical. However, it is not to say that your business is unlikely to qualify if it does not fall within these sectors. Each business needs to assess their eligibility based on the guidelines on the definition of R&D for tax purposes, which can be found in CIRD81900 or CIRD81910.

At Moore R&D, we have vast experience when it comes to assessing whether businesses qualify for relief. We offer a free scoping call to discuss whether any potential R&D projects are eligible, so, contact us today if you would like to arrange this.

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