Companies (small or medium enterprises) that engage in research and development (R&D) activities can claim enhanced expenditure against their corporation tax where the R&D project or projects qualify for R&D tax relief.
Complex rules apply in determining whether qualifying R&D has taken place, however a successful claim can bring material tax savings along with a cash injection into the company (where there is a loss). Furthermore, for ongoing R&D projects, claims may be made year on year.
Note - large companies may also obtain relief for R&D under the RDEC scheme, however the focus of this article is on the rules applying to small and medium enterprises (SMEs). Rates are based on the 2020/21 UK tax year.
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