Blackman Terry Article on Research & Development Tax Credits

Published: 20 Nov 2019

What Are Research & Development (R&D) Tax Credits?
R&D tax credits enable SME companies that incur costs in developing new products, processes or services to receive a cash payment or tax deduction.

This checklist will help you see if you are eligible: 

  • I have a limited company based in the UK
  • I employ less than 500 people
  • My turnover is less than £85 million a year
  • I’m working on something new and different and think my competitors would use it if they could

Where an SME incurs expenditure of £100,000 on qualifying R&D, it can deduct £230,000 when calculating its taxable profit, or loss, for corporation tax purposes. As the £100,000 would already be accounted for in its accounts, the balance of £130,000 would be an additional deduction from its taxable profit and the corporation tax saving would be £26,000 (at a corporation tax rate of 20%). The equivalent of the company receiving 26p from HMRC for every £1 they spent on R&D activities.

Blackman Terry has had great success with claiming R&D tax credits.  One client told us they “were thrilled and surprised with the size of the cheque they received from HMRC”.

If you would like to discuss this further, please email or call Blackman Terry Accountants – / 01444 882381.

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