What are the Requirements of Scientific Sector to Claim Tax Relief?

Q: We’re a fledgling business in the scientific sector with a turnover of under £500k at the moment and just 22 staff. We’re looking to make sure we claim the tax relief we’re entitled to under the Government’s Research and Development scheme. What do we need to know?

A: It sounds like you are in a position to claim Research and Development (R&D) tax relief but let’s look at what you need to do for your project to meet the necessary criteria. What qualifies as R&D? HMRC states that it “must be part of a specific project to make an advance in science or technology”.

For anyone reading this working in social sciences, however, including economics, I’m afraid you wouldn’t qualify.

The type of relief you can get depends on the size of your company. In your case, you’d fall under the small and medium sized enterprise category. It’s clear you would qualify under the criteria, which states SMES must have less than 500 staff and a turnover of under 100 million euros or a balance sheet total under 86 million euros.

Further stipulations are that your project must be connected to either your current trade or one you plan to set up following the results of the research. The scheme also requires you to explain a number of things, including how it is advancing the field of knowledge, how it’s overcoming a “scientific or technological uncertainty” and also why it could not “be easily worked out by a professional in the field “.

The official guidance also states that “your project may research or develop a new process, product or service or improve on an existing one. ”

If you’d like further help with understanding R&D tax relief, please do get in touch with our team and we would be happy to discuss the full details.

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