R&D Tax Relief

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I keep hearing the phrase “R&D Tax Relief for businesses” ~ What is it? What does it do? How does it work?

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Companies are allow to consider R&D (research and development) part of the cost of making their products, under certain rules. If your company makes electric cars, this allows you to consider the cost of al your battery research a “cost of doing business”, and allocate part of the price of each car to that. This reduces your profit per car, and that profit is what you pay income taxes on. (That was a dangerous oversimplification of corporate taxes, but it’s ELI5.)