Research and development tax relief available for construction and related industries. Demystification guide

Historically, UK spending on R&D, as a proportion of GDP, has been somewhat lower than in other countries. As part of its agenda to build a modern knowledge based economy and improve productivity, the government wished to increase the amount spent by companies on R&D. As a result, it introduced two reliefs for companies for expenditure - one for large companies and the other for companies that are small or medium sized (SMEs). This report explains in simple terms the principles of R&D tax relief (credits) but it is not a definitive guide. Any matter of taxation can have levels of complexity that require more expert knowledge so advice should be sought from taxation advisors. There are three key definitions and explanations of terms discussed in the guide: what counts as R&D?, 'seek to achieve' an advance in science or technology, and qualifying R&D. These and other terms are explained in more detail with examples later in the more detailed chapters.