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R&D, creative industries and games tax credits – what you need to know

You may have heard of R&D tax relief – the system of tax breaks the Government gives to companies carrying out certain activities.

Tax credits are a way for the Government to stimulate certain industries by allowing companies involved in activities they specify to claim money back on their spending.

There are two main types that apply to our clients – R&D and Creative Industries (including the development of games).

What you need to know about R&D tax credits

This scheme was created to encourage business innovation. Many of our clients carry out qualifying activities and could be entitled to a tax break.

According to the Government, to be eligible you must have attempted “to resolve scientific or technological uncertainties”, in practice that means you need to have:

* Tried to create something new which enhances your business or changes how you do things

* Used some kind of science (not necessarily the kind that takes place in a lab)

* Faced an element of uncertainty or business risk in creating the new thing

* The scheme effectively allows you to claim back the costs of the research and development you have undertaken, even if you weren’t successful in your attempts.

A good example is tweaking a CRM system to fit your needs or creating your own.

The rate for R&D relief is currently 230%, which means that for every £100 you spend, your Corporation Tax is reduced by £26 on top of the £100 you spent. There are slightly different rules for companies which make a loss.

What you need to know about Creative Industries tax credits

Updated in the 2017 Spring Budget, this tax break applies to companies:

* Making films and high-end or children’s television programmes, but not for promotional purposes

* Creating theatre productions

* Developing video games

* Creating animations

* Running an orchestra

The rate of tax relief for creative industries varies according to the type of company and activity. And of course, there are lots of thresholds and exclusions to bear in mind, but we can talk you through these if you believe you have an eligible piece of work.

Think you could apply?

Of course, we will discuss potential tax relief at your year-end meeting, but if you think you could apply for tax credits just give us a call to talk about your situation.

 

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