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Do R&D tax credits apply to a sole trader?

by Gemma Brown

Research and development (R&D) tax credits can only be claimed by companies which are liable to UK Corporation Tax. Sole traders do not pay UK Corporation Tax and, as a result, they cannot claim R&D tax credits.

R&D tax credits are form of Corporation Tax relief and so if you are a sole trader you are not registered for UK Corporation Tax, therefore you cannot make a claim.

Conditions for claiming as an SME:

  • Company is a going concern.
  • Company is within the charge to UK Corporation Tax.
  • Company meets the SME thresholds for headcount and turnover or balance sheet assets.
  • The company carries out a trade or future trade to which the R&D activities relate.
  • The R&D activities claimed have not been contracted to the company.
  • Expenditure is deductible for Corporation Tax purposes in the claim period.
  • No grants or subsidies have been received in respect of the expenditure.

At ForrestBrown, we specialise in R&D tax credits and advise innovative businesses on their role in the funding cycle. For advice on R&D tax credits and their relationship with other forms of funding, speak to our friendly team of chartered tax advisers, technical specialists and ex-HMRC inspectors today.

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This article was last updated on 13 November 2018.

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