All about UK tax credits

There are different types of tax credits such as earned income tax credit, child, and dependent care credit, advanced premium tax credit, savers credit, R & D among others.

In this article, I am going to expound more on research and development tax credit (R & D) which has been implemented in the United Kingdom.

Research and development tax credits are tax reliefs’ rewards given to companies investing in innovation such as the development of new products, processes, and services or on enhancing the existing ones. These tax reliefs can be used as an alternative for innovation grants for research and development funding or complement the grants. They are also used to encourage research companies to invest in research and innovation.

To qualify for this kind of credit, your company must engage in scientific and innovative projects which enhance existing products and services or come up with new ones something that isn’t known to be scientifically or technologically feasible when you make it.

There are different types of R and D credits, and they depend on; the size of your company and whether the project has been subcontracted to you or not, the kind of company companies involved with research projects are more likely to benefit from this tax credit.

Various principles need to be respected for eligibility to the R and D tax credits, these include;

  • Seeking to achieve a scientific or technological advancement: you need to show that whatever your innovation is, it is not known publically and if you are improving an existing product, you need to prove that it is not being done elsewhere by another company.
  • Subject to scientific or technological uncertainty: to be eligible you must explain that the research is necessary and the measures you have taken to overcome the skepticism.
  • The project should be conducted systematically and thoroughly, which does not cause harm to the general public as in safe for human and the environment.

Eligible costs that are covered include staffing and consumable price, software, subcontractors and research contributions. On the part of subcontractors and research contributions, it implies that if you are going to employ another company to work on your ideas, you need to make sure that they have signed a confidential agreement restricting them from working on the same project to another company in other words “you own them.”

The R and D credit claiming process is as follows: you need to assess a qualifying research and development activity, calculate its expenditure and submit the figures in their respective form in the tax returns form and finally wait for your approval.


The move to offer relief in research and development field is very essential in the countries scientific and technological development it shows that the Government cares its people by the provision of quality up to date services.