Essentially, this scheme aims to help offset the cost of investing in R&D by offering tax reductions. For most companies this will come in the form of corporation tax relief. If your organisation is small or medium-sized though, you may be able to choose a tax credit instead, in the form of a cash sum paid by HMRC.
You can only claim R&D relief if your business is liable for corporation tax. There are two schemes, depending on the size of your organisation; the SME scheme (for companies with less than 250 employees and less than £50m turnover) and the large company scheme (for those with more employees and turnover).
The SME scheme
Since 1 April 2015, the tax relief on R&D costs is 230%. This means, for every £100 of qualifying R&D costs, your company or organisation could have the income on which corporation tax is paid reduced by an additional £130 on top of the £100 spent. It also includes a payable credit in some circumstances.
The large company scheme
If you’re not an SME, tax relief is only available if you spend at least £10,000 a year on qualifying R&D costs in an accounting period.
You can find out more about R&D projects and costs that might qualify for tax relief on the gov.uk website, as well as the important terms and conditions. You can also find out more about how much R&D SMEs can claim and how to claim it.