The research and development (R&D) tax credit is an incentive the UK government offers to reward innovation. It is a valuable cash source for businesses to support their R&D effort, hire new staff, and ultimately develop their idea into commercial success.

The R&D Tax Credit is popular among startups, scaleups, and large established businesses. It reimburses eligible companies a percentage of their investment in qualifying R&D through cash credits and corporation tax reductions.

 The company must be liable for UK corporation tax and conduct research and development work that satisfies HMRC’s ‘eligible R&D’ definition to qualify.

You have up to two years from the end of your accountancy period to submit your R&D Tax Credit claim.

How much can you claim?

Under the SME scheme, small companies can receive a refund of up to 33.35% of eligible expenses incurred before 1 April 2023 and up to 27% of expenses incurred on or after this date. The refund amount depends on various factors, such as the applicable scheme, the financial position of the company, and the amount of corporate tax, PAYE, and National Insurance paid.

For large companies or subsidiaries of large companies, the RDEC scheme applies, which allows for a refund of between 10.50% and 16.20%.