Research & Development Costs
Did you know that if you spend more than £25,000 a year in research and development costs you might be able to get 150% of the cost as a tax deduction?
Even better, if you are in a loss position you can have up to 24% of the research and development costs refunded in cash by the tax authorities.
Where are the catches? Well, you have to spend more than £25,000 on specific research and development costs. This can include salaries as well as material and equipment. The cost must have been incurred since
1 April 2000
. The company has to own any IP rights resulting from the research and development, which must be related to the business of the company. Additionally the company must have less than 250 employees, less than £40 million turnover and less than £27 million of net assets.
The research and development must show a scientific or technological advance. For example, for software it may include new operating systems, new or enhanced query language, new programming languages, significant technical advances in algorithms. It will not include debugging, converting computer languages, adoption of existing software, or preparing user documentation.
The research and development does not have to be undertaken in the
UK
but as stated above the
UK
company does have to own the software rights.
This generous relief is aimed at helping small technology businesses and the Revenue is lending a sympathetic ear to claims, which are genuinely related to experimental and developmental work. |
