Research & Development Tax Reliefs for Small and Medium-Sized Enterprise (SMEs).

R&D relief to companies and is granted by enhanced deduction or by payable credit. From 1 April 2015 the deduction is 230% while the payable credit is 14.5%. The qualifying conditions are as follows.

  • The company must have been engaged in qualifying R&D activity.
  • The company must be a going concern.
  • Any single R&D project must not receive total aid of more than €7.5m.
  • There are special rules if a company has received state aid in respect of the project.
  • Expenditure is not generally available if it has been subsidised.
  • Special rule apply for contracting and sub-contracting R&D.

When claiming R&D include a report with the company’s tax computation giving full details of the expenditure. Consider amending the principal activities statement of the accounts to say that R&D is undertaken.

Research is theoretical work undertaken to acquire new knowledge or work undertaken to gain new scientific or technical knowledge directed towards a specific aim.

Development is the use of scientific or technical knowledge to produce new or substantially improved materials, devices, products or services or to install new processes or systems prior to the commencement of commercial production or commercial application or substantially improve processes already produced or installed.

The expenditure must be in a scientific or technical field and there must be advancement of knowledge.

Published 1 August 2018