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NGu003cem data-rich-text-format-boundary=u0022trueu0022u003eAn Ru0026amp;D tax credit is a cash payment from the government to encourage companies to do Ru0026amp;D. There are two different types: u003ca href=u0022https://swoopfunding.com/uk/rd-tax-credits/u0022u003eSmall and medium sized enterprises (SME) Ru0026amp;D tax reliefu003c/au003e and u003ca href=u0022https://swoopfunding.com/uk/rd-tax-credits/rdec/u0022u003eResearch and Development Expenditure Credit (RDEC)u003c/au003e.u003c/emu003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003e u003cbr data-rich-text-line-break=u0022trueu0022 /u003eRu0026amp;D tax credits are a tax incentive (in the form of a cash payment) from the government, designed to encourage companies to invest in research and development.u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eThere are two types of Ru0026amp;D tax credit:u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003e• u003cstrongu003eSmall and medium sized enterprises (SME) Ru0026amp;D tax reliefu003c/strongu003e – you can claim up to 33p for every £1 spent on Ru0026amp;D if you have no more than 500 employees and meet the maximum revenue or balance sheet criteria. u003cbr data-rich-text-line-break=u0022trueu0022 /u003e• u003cstrongu003eResearch and Development Expenditure Credit (RDEC)u003c/strongu003e – if you’re a larger company (or you’ve been subcontracted do Ru0026amp;D work by a large company) you can claim an RDEC tax credit worth 12% of your qualifying Ru0026amp;D expenditure.u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eRu0026amp;D tax credits are a tax relief designed to encourage greater Ru0026amp;D spending, leading in turn to greater investment in innovation. They work by either reducing a company’s liability to corporation tax or by making a payment to the company. u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eA SME may claim a higher rate of relief than a large company. Also, a SME which has no tax bill to reduce may claim a cash payment instead. u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eRu0026amp;D tax credits were introduced for SMEs in 2000 and extended to large companies from 2002. An additional “top-up” relief for vaccines research was introduced in 2003 – known as Vaccines Research Relief (VRR)
If you’re a limited company and you want to research or develop an advance in your field you might be able to apply for Ru0026amp;D tax relief. Ru0026amp;D projects must be in science or technology, but HMRC’s definition is broad and includes investment into technology and IT systems. Software developers, architects and many other professions have all successful claimed Ru0026amp;D tax relief as a result of this tax incentive. You can even claim on unsuccessful projects – or if your business is running at a loss.u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eIf you think you’re eligible, you file a tax credit claim as part of your CT600 form – alongside your accounts – with HMRC at the end of the financial year in which you spent money on an Ru0026amp;D project. HMRC then processes your claim and, if you’re successful, pays you a tax credit. If you want cash more quickly, then you can also consider an u003ca href=u0022https://swoopfunding.com/knowledge-hub/rd-tax-credit-loan/u0022u003eRu0026amp;D tax credit loanu003c/au003e. This is a newer type of loan that uses your future Ru0026amp;D tax credit payments (from HMRC) as security.u003cbr data-rich-text-line-break=u0022trueu0022 /u003eu003cbr data-rich-text-line-break=u0022trueu0022 /u003eFor all Ru0026amp;D tax credits, you must be able to explain how:rnu003culu003ern tu003cliu003eyou looked for an advance in science and technologyu003c/liu003ern tu003cliu003eyou had to overcome uncertaintyu003c/liu003ern tu003cliu003eyou tried to overcome this uncertaintyu003c/liu003ern tu003cliu003eyour advance could not be easily worked out by a professional in the fieldu003c/liu003ernu003c/ulu003e
You can apply for Ru0026amp;D tax credits in conjunction with u003ca href=u0022https://swoopfunding.com/uk/business-grants/u0022u003egrantsu003c/au003e. Ru0026amp;D tax credits are a retrospective tax relief that you claim after you’ve begun your research and development. Grants, by contrast, are up-front funding for which you have to pitch.rnu003culu003ern tu003cliu003eAs of 30 June 2020, there have been 59,265 Ru0026amp;D tax credit claims for 2018-19, of which 52,160 are in the SME Ru0026amp;D scheme.u003c/liu003ern tu003cliu003eAs of 30 June 2020 £5.3bn of Ru0026amp;D tax relief support has been claimed for 2018-19, corresponding to £35.3bn of Ru0026amp;D expenditure.u003c/liu003ernu003c/ulu003e
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