R&D tax credits is a scheme introduced by the government to encourage innovation and investment in science and technology.
Under the scheme, small and medium-sized enterprises (SMEs) are given tax breaks for carrying out R&D activities. This is not to be confused with the R&D Expenditure Credit (RDEC), which is for large corporations.
The initiative allows companies to:
recover up to 33% on the costs they’ve spent on R&D whether they’re profitable or loss-making
recover up to 14.5% of the ‘surrenderable loss’ if they’re loss-making and opted for a cash repayment
The repayment can be in the form of a corporation tax reduction, a cash payment or a combination of both. How you’ll receive your tax credits depends on whether your company was making a profit or loss.