In the UK, companies that are involved in some forms of research and development that impacts positively on society are normally eligible for cuts on their corporation tax. This is what is referred to as Research and Development Tax Credits. To qualify for R & D Tax Credits, a company must be a Corporation Tax payer and be either a large company or a small or medium size enterprise (SME).

In UK, an SME is defined as company with not more than 500 employees and an annual turnover of not more than 100 million. The SMEs are allowed to claim up to 225% of the corporation tax. The 25% increase was effected in April 2012.

On the other hand, large companies are required to spend not less than £10,000 annually on research and development projects. From 1st April 2012, the upper limit for this expenditure was removed.

In 2000, the UK government introduced the R & D Tax Credits in order to encourage people to focus more on innovative projects in science and technology. The aim was to enable more investment in these fields in order to make the UK economy more sustainable and competitive globally. In this respect, companies would be expected to invent new products or improve on the existing ones using science and technology or improve on science based knowledge necessary for efficiency in specific industries.

For a company to claim R & D Tax Credits, they must demonstrate how their research and development project for which they are pegging their claim contributes in advancing knowledge in the society. This knowledge must also be demonstrated to be disseminated to the public. At the same time, the company must register for the intellectual property rights of that research which they base their claim upon.

In order to effectively claim for R & D Tax Credits, it is important for a company to keep very thorough records that are part of the general business accounting. Claiming for R & D Tax Credits is done as part of normal tax returns by a ccompany. However, a company must give details of expenditure, materials used, employee costs and other utilities among other expenses related to the claim.

A company can apply for R & D Tax Credits every year as it submits the annual corporation tax. If a company is making claims or the first time, then they can submit claims for the preceding year together with the current year\’s claims. The maximum claim that can be made is £7.5 million.

Currently, research has shown that many companies that are eligible to claim R & D Tax Credits are not making good use of this facility. This is a deservice to them since they find it hard reaching their target. This is mainly because they are not aware that some of the operations they are involved actually make them qualify for these claims. It should however be realised that a company need not necessarily create a new product to qualify. Even investing in research and technology that makes it cheaper and faster to do something will be considered as a qualification for R & D Credits.

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: tax credits,r&d tax credits,tax