A profitable SME: In addition to the tax relief your company’s eligible R&D expenditure generates as part of its normal operational costs, a further 86% can be deducted from the yearly profit. That means with an R&D tax credit incentive of up to 21.5%, if you 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.

Businesses qualify for varying R&D tax relief rates based on categories. Profitable SMEs can deduct 86% from yearly profit, potentially claiming a 21.5% tax credit. Loss-making SMEs may get an 18.6% payable credit, while R&D intensive SMEs (40% R&D expenditure) can secure up to 27%. Large companies (RDEC scheme) enjoy a 20% tax credit.