Tax tip number nine is about Research and Development, or R&D. Watch our video below for some more information on R&D credits.

Now, R&D can conjure up an image of laboratories and people in white coats, but it doesn’t have to be like that.

So what is research and development? R&D is when you develop something innovative and new. This can be a new product but could also be a new system or process – a way of making things quicker or better within your business or for others.

So, what’s the effect?

If you have developed a new product, system, or service, you may be eligible to claim research and development credits. If you claim these credits, you can increase the tax relief you receive on the expenditure.


The way this works is that for every £1 you spend, you get £2.30 deducted in your Corporation Tax return from your taxable profits.

What this actually means is that it increases your tax relief by nearly 25%.

To give you an example, if you spent £100,000 on a standard expense, it would reduce your tax bill by £19,000, ie 19%.

However, if you spent a £100,000 on expenses that could be deemed as research and development, it would reduce your tax bill by £43,700, which is 19% of £230,000.

That’s an extra £24,700 pounds knocked off your tax bill. So it really is well worth doing.

Now you should be aware there are a lot of criteria you need to fill in to be able to claim research and development credits. It can be a little bit technical, but it is something a lot of people are eligible for but don’t know about it. It’s always worth checking as it can have a huge effect on your tax bill.

And it’s something that the HMRC actually wants to give you as the Government is incentivising you to innovate. So please look at it.

If you would like any more information, please get in touch.