How Much R&D Tax Credit Can A Business Claim In 2024?
Understanding how much Research and Development (R&D) tax relief you can claim is crucial for businesses. This guide provides an overview of how much R&D claims can be made for HM Revenue & Customs (HMRC) in 2024.
The amount of Research and Development (R&D) tax credits you can claim depends on various factors, including your business category and the scale of your R&D activity and costs.
Here are examples for different types of businesses and the rates of relief that apply:
Profitable SME (Small and Medium Enterprise):
In addition to the tax relief generated from your company’s eligible R&D expenditure as part of its operational costs, you can deduct a further 86% from the yearly profit.
With an R&D tax credit incentive of up to 21.5%, if your SME spent £500,000 per year on R&D, you could potentially claim back up to £107,500 as a tax refund or reduced tax liability.
Loss-making SMEs can claim a payable credit.
With an R&D tax credit incentive of up to 18.6%, if a company spent £500,000 per year on R&D, it could potentially claim back up to £93,000.
Loss-making, R&D Intensive SME:
To be considered R&D intensive, at least 40% of a company’s total expenditure must be spent on research and development.
Businesses in this category are eligible for an R&D tax credit incentive of up to 27%.
If you spent £500,000 per year on R&D, you could potentially claim back up to £135,000.
Large Company (under the RDEC scheme):
The R&D Expenditure Credit (RDEC) scheme offers a tax credit of 20%.
Companies can claim back up to 20p for every £1 spent on qualifying R&D activities.
Whether the company is making a profit or loss is immaterial.
If a company spent £500,000 per year on R&D, it could potentially claim back up to £100,000.
It’s important to note that these examples provide a general overview, and the specific details of your claim may vary. Consulting with a tax professional or R&D tax specialist can help you determine the exact amount you’re eligible to claim based on your unique circumstances and R&D activities.
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