How will I receive my R&D tax credits?

How will I receive my R&D Tax Credits?

Research and development (R&D) tax credits are awarded as cash payments or offset against your tax liability.

 

If your business is a small to medium-sized enterprise (SME) and you have been engaged in R&D in previous years but not been aware of the scheme, you can still make a backdated claim up to two years after the end of the accounting period. This will be awarded as a cash rebate for the qualifying years.

 

SMEs can use the 230% tax credit to reduce the Corporation Tax they pay if they are in profit, while loss-making organisations receive cash credits.

 

R&D Expenditure Credit (RDEC)

For larger businesses, or if your SME has been subcontracted for R&D work by another company, the RDEC applies. The process for submitting a claim is similar to that of SMEs, but the tax credit is worth 12% of your qualifying costs.

 

Under RDEC, the credit is subject to Corporation Tax and is used to settle any liability for that accounting period. If any credit remains, it can be put towards other liabilities, such as VAT, before the final amount is ultimately paid to the company.