Research and Development Expenditure Credits
There are a variety of incentives available to firms of all sizes that are engaged in innovation to increase tax relief or grant cash credits.
(RDEC)
Research and Development Expenditure Credits
There are two brackets under the Research and Development tax relief scheme, it is important to establish which type of company you fall under and the rules which apply to you.
These two brackets are:
- A benefit that appears in your company accounts as a source of revenue is called “Over the Line.”
- Your RDEC is only worth a maximum of 13 percent of the money spent on research and development.
- 9.7% Return on Investment For every £1 invested on R&D, your business is eligible for a 9.7p return, or the 9.7 percent statutory corporation tax rate.
- Companies who are experiencing losses can also gain from RDEC through a net of tax cash credit.
The main difference between SME and RDEC is that, RDEC can be claimed by large companies whereas SME can only be claimed by SMEs.
(SME)
Small and Medium-Sized Enterprise Tax Credits
To quality for SME your company must adhere to the following criteria:
- A privately owned business, as opposed to a public limited company, is typically an independent business.
- Under 500 Employees – Your company would be classified as a major company if it had more than 500 employees.
- If your firm’s turnover is greater than €100 million or your balance sheet assets are fewer than €86 million, you are considered a major corporation (RDEC).
- UK Resident Trading Company: If your company is not UK-incorporated, the UK must be where the majority of its operations are located. Partnerships and lone proprietors are not included.
- When applying for the SME, all associated firms and partnerships must be registered in order to determine if you belong under the SME or RDEC category.
- SME can also help loss-making businesses by providing them with a cash credit that is net of taxes.
SME and RDEC
Research and Development Expenditure Credits & Small and Medium-Sized Enterprise Tax Credits
The Research and Development Tax Relief Scheme has two brackets; it is necessary to determine the category of company you come under and the criteria that apply to you.
These two brackets are:
- SME Tax Credits
- Research and Development Expenditure Credits (RDEC)
The main difference between SME and RDEC is that, RDEC can be claimed by large companies whereas SME can only be claimed by SMEs.
Popular Industries For R&D Tax Credits
We have identified these 6 industries as the most popular and lucrative in business. At Optio we have experts in each sector ready to assist your business.
- Manufacturing
- Hospitality
- Engineering
- Agriculture
- Health & Wellbeing
- Waste Management
