What are R&D Tax Credits? Introduced by the British government in 2000, Research and Development Tax Credits are intended to incentivise businesses to invest in innovation, allowing you to claim back some of the money that you have spent on trying to improve your industry. While you can check our calculator at the bottom of the page to get a quick estimate of how much you could be refunded, SME’s can potentially claim back up to 33% of costs incurred while performing R&D. The three main types of tax credits you could receive are as follows: Payable cash credit For loss-making SMEs, the payable cash credit is not treated as taxable income. For loss-making Large Companies, the payable cash credit is treated as taxable income. Rebate of corporation tax Companies that paid tax in the previous two years can roll back the relief to get a rebate of Corporation Tax. (This is tax they would not have paid if they had made the claim at the time.) Enhanced deduction That can be carried forward. Some companies will have no option but to keep the relief for use in future years and others will choose to do so because they are confident that they will be paying tax at a higher rate in the future. What kind of activity qualifies? What constitutes R&D for most people may be very different from HMRC´s interpretation. At best this leads to wasted time, but in the worst case scenario it could lead to a HMRC investigation. Qualifying R&D activity can… be undertaken in almost any industry, and can include trying to make something cheaper, faster, smaller, larger or longer, etc It can even include duplicating a product, process, service or device, as long as it’s in an appreciably improved way. According to HMRC, a company is undertaking R&D when they’re… overcoming technological uncertainties, through achieving an advance in technology, and which isn’t readily deducible by a competent professional. Encouragingly, R&D is still deemed to have taken place whether or not the project is actually successful; it’s the ‘seeking’ that counts.