How does an SME or Startup show their R&D tax credits in their accounts?

R&D tax credits are not considered taxable income for SMEs that receive a credit or payment for a successful claim similar to how a grant is accounted for.

They are considered below the line income. Your company’s profit and loss account (also called your income statement) will show the R&D tax credits as either a Corporation Tax reduction or a credit.

Your corporation tax will be adjusted to reflect the amount of your R&D tax credit benefit as part of the process when filing your tax returns. This could be through your initial submission of your tax returns or as an amendment to an already submitted tax return

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Accounting is one of the most important pieces of the puzzle when it comes to maximising a risk-free R&D tax credit claim. We provide a Free accounting period to help you organise your finances to make sure that your R&D claims make the most of the SME R&D tax credits scheme.

F6S can help with your R&D claim