You may already know that innovation is the key to success in today\’s rapid changing business world. That is why almost all the companies in the UK have been investing a portion of their income in Research and Development (R&D). They have continued to do so even when finances become tighter because of the financial crisis across the globe. Moreover, the Government of UK has tried to facilitate R&D expenditure, by providing various incentives, to keep the economic growth at a desired level. R&D tax credit is one of such incentives, provided by the government. This can reduce the tax bill of the corporation substantially, by more than the actual expenditure on the allowable R&D cost. R&D tax credits can be attained by a company that is liable for corporate tax. The government provides R&D tax credit as the biggest single funding mechanism for business R&D expenditure.

What Types of Organizations In UK Would Be Eligible for R&D Tax Credits?

There can be different R&D tax credit schemes for small and medium enterprises (SME) and large companies. Each scheme has different characteristics, but the basic functions are the same. One company or organization would only be eligible for tax credit, if its R&D projects strive to achieve a development in overall knowledge or capability, in a field of science and technology, through the resolution of science or technological uncertainty and not simply with an improvement in its own state of knowledge or capacity. That means the project would be considered as R&D project, if the works involve developing scientific or technological knowledge which are not commonly available and if the firm needs to overcome specific scientific and technological challenges as part of the project.

How Can You Get R&D Tax Credits?

To get tax credit in a R&D project, your project must satisfy certain statutory tests in accordance with various rules, regulations and guidelines on R&D tax credit. For that reason R&D activities of your company must be recorded and accounted as R&D expenditure under Generally Accepted Accounting Principles of UK or (UK GAAP).

Why Does the Government of UK Facilitate R&D Tax Credits?

Tax incentives such as tax credits for R&D are comprehensive support measure and the amount can be considerable. These types of tax incentives often increase the R&D expenditures by different organizations. When granting tax credits for R&D, governments consider that this incentive is often general in nature, based on a belief that the scheme is going to work in the desired way, and therefore should be available to all. However, governments usually evaluate new schemes before implementing it because they are some to extent uncertain, whether it would work or not. But, a well-planned tax credit scheme may open up many long term investment opportunities, create more employments and facilitate development.

The R&D tax credit facility has also created a positive image for UK for high end investment projects. To make long term investment decisions, it is vital that companies of the UK have the confidence, that incentives such as R&D tax credit would continue, and improve value in future. Commitment of further tax incentive and tax credit would encourage the companies, to make valuable contributions to the economy of the UK. Measures like ensuring future tax credit, allowing more companies to apply for the opportunity and reducing the cost and legal barriers, would attract more large scale R&D projects, which would provide economic and environmental benefits.

For more information on tax credits, visit R&D Tax Credits. For more articles by Steve Shaw and permission to reproduce these articles on your own website, visit: Free Articles.

For more information on R&D Tax Credits, visit http://www.randdukltd.co.uk. For more articles by Steve Shaw and permission to reproduce these articles on your own website, visit: http://www.sbwebconsulting.co.uk/free-stuff/free-content

Author Bio: For more information on tax credits, visit R&D Tax Credits. For more articles by Steve Shaw and permission to reproduce these articles on your own website, visit: Free Articles.

Category: Finances
Keywords: r&d tax credits,r&d tax credit,