Research & Development

When discussing R&D the first thing that often comes to mind is scientists in white coats with their test tubes and Bunsen burners. However you may be surprised to know that in the eyes of the Inland Revenue many different types of businesses may be conducting R&D, from engineering or manufacturing businesses to a computer software developer and designer.

If you are developing or improving a product or process which is unique and innovative then you might have incurred relevant R&D expenditure. If this is the case then you may be entitled to R&D tax relief.


R&D Tax Relief

Initially introduced in 2000 R&D tax reliefs were established to help drive innovation in the UK. The scheme offers companies that carry out R&D activities the opportunity to reduce their tax bill or in some instances claim refunds or tax credits.

The R&D tax scheme works by allowing companies to deduct an enhanced percentage of their R&D expenditure from their taxable profits. In the case of small or medium enterprises the deduction is currently 100 per cent( giving a total allowance of 200%), and from 1st April 2012 will increase to 125 per cent ( giving a total allowance of 225%). If the enhanced deduction creates a taxable loss it is even possible to receive tax relief by way of tax credits.

Eligible costs

The following costs qualify:

  • Employee costs
  • Externally provided workers
  • Materials and consumables
  • Utilities
  • Software
  • Subcontracted R&D expenditure
  • Payments to clinical trial volunteers


A guiding hand

The financial benefits of R&D tax relief can be significant, especially for SMEs, but it appears that many businesses are not taking advantage of it either because they mistakenly think that they are not carrying out R&D activities, or believe that the claim process is too complex and time consuming. Garratt’s can guide you through the claim giving you simple, straight forward but expert advice.

Initially we help to recognize the relevant R&D activities, and then identify and maximise the qualifying costs associated with each activity. We calculate and compile the actual claim, together with any further narrative required, submit the claim to HM Revenue and Customs, and deal with any queries that may arise.

At Garratts, our specialised staff have completed a number of successful R&D claims and have experience in assisting all sizes of companies. If you would like to find out if your company is undertaking eligible R&D activities, or if you would like to know more about R&D tax relief, please contact us.