R&D Tax Relief

What Are Research And Development Tax Credits? 

Research and Development (R&D) tax credits are a form of tax relief offered by the UK Government aimed at fostering investment into new science and technology in varying industries. R&D tax credits are available to businesses who have invested in advancing research and development in their field. 

To qualify, the project must seek to advance the science and technology of your company’s industry, i.e. dentistry.

Your project must: 

  • look for an advance in science and technology
  • have had to overcome uncertainty
  • tried to overcome this uncertainty
  • could not be easily worked out by a professional in the field

If your practice has invested in a research and development project, you may be eligible for corporate tax reduction or a cash benefit. 

R&D Projects For Dentists

Below are a list of examples of projects that could count towards Research and Development tax relief. 

  • Projects aimed at improving clinical results and success rates
  • New bonding materials and processes
  • Research into different bone grafting techniques
  • Technological advances in 3D printing
  • Trials in decontamination 

What R&D Tax Relief Is Available

Dental Practices tend to fall under the Small to Medium Enterprise (SME) category. As such, dental practices that have invested in R&D projects are eligible for the Small and medium sized enterprises (SME) R&D Relief.

SME R&D Tax Relief entitles companies to:

  • Deduct an extra 130% of their qualifying costs from their yearly profit – (with the usual 100% deduction this makes a 230% total deduction).
  • If the company is making a loss you can claim a tax credit worth up to 14.5% of the surrenderable loss.

Do I Qualify For R&D Tax Relief? 

With the 31st July tax payment deadline approaching, now is the perfect time to find out whether you and your practice are eligible for Research and Development tax credits. 

If your practice has invested in any R&D projects, or indeed if you plan on doing so in the near future, you may be entitled to tax relief. 

Contact Samera now if you are unsure if your business qualifies, or if you need assistance in claiming your compensation. 

Benefits of R&D Tax Relief – An Example

The example balance sheet below shows just how much in the way of savings you can make by claiming for R&D tax relief.

In this example, you can see that the owed corporation tax without an R&D tax credit would total £47,500.00. However, the same bill with an R&D tax credit claim woulds only total £22,800.00.

That is a tax saving of £24,700.00, or 52%

Sales£1,000,000.00
Cost of Sales(£500,000.00)
Gross Profit£500,000.00
R&D Qualifying Expenditure(£100,000)
Other Expenses (£150,000.00)
Total Operating Costs(£250,000.00)
Net Profit Before Tax £250,000.00
Tax Due (see below)(£22,800.00)
Total Tax(£22,800.00)
Profit After Tax 227,200.00
Tax Computation
Net Profit Before Tax £250,000.00
Less R&D Relief at 130%(£130,000.00)
Adjusted Profit Before Tax £120,000.00
Corporation Tax Due at 19%22,800.00
Corporation Tax Without R&D Tax Credit£47,500.00
Corporation Tax With an R&D Tax Credit Claim £22,800.00
Tax Saving with R&D Tax Credit Claim £24,700.00
% Saving 52%