Open new doors with R&D tax credits – make a claim today

Research and development (R&D) tax credits were launched by the Government to reward companies in the UK that invest in innovation.

These tax credits are a valuable and underutilised source of support to help businesses invest in R&D, hire new talent and grow.

Within the scheme’s accepted research and development definition, R&D doesn’t even have to have been successful to qualify and you can also include work undertaken for a client.

In order to benefit from R&D tax credits, you must:

• Be a UK limited company that is subject to Corporation Tax.
• Have completed qualifying research and development activities.
• Have spent money on an eligible project.
• Have incurred qualifying expenditure.

Still not sure if you qualify for R&D tax credits, give us a call today on 01277 245300.

Depending on whether you are a small to medium-sized enterprise (SME) or large company, the scheme that you apply for can differ.

The scheme classifies a business as an SME if it has fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets.

Any business with more than 500 members of staff and either more than €100 million turnover or €86 million gross assets is classed as a large business.

SMEs will usually apply for the SME R&D tax credit scheme, while large companies can apply for Research and Development Expenditure Credit (RDEC) – although where an SME works alongside a large company on R&D, they may be able to claim Research and Development Expenditure Credit or even both schemes.

Please note that if a company receives a non-project specific grant which is Notified State Aid then it cannot claim for relief under the SME scheme on the R&D project(s) that this notified state aid goes towards. SMEs that are considering applying for a grant which is Notified State Aid, should ensure their grant application is for a specific project, so that any other R&D projects undertaken remain eligible for SME relief.

Please note, Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) are notified state aid and if you have been in receipt of these then it could affect your ability to claim through the SME R&D scheme.

This can be an important area of planning and advice should be sought if you have received or are planning on receiving notified state aid.

Calculating the claim

The amount of relief a business receives depends on its R&D spend and a number of other factors.

In order to calculate the R&D tax credit, a business will need to identify qualifying expenditure and look at the relevant rate for the business in order to create a calculation for your enhanced expenditure.

The actual amount of enhanced expenditure claimed under the R&D tax credit scheme is an additional 130% of the qualifying costs, so 230% in total.

When you deduct your enhanced expenditure from your taxable profits or add it to your loss, it will result in one of three outcomes:

• a Corporation Tax reduction if you are profit-making
• a cash credit if you are loss-making
• or a combination of the two.

Businesses should be aware that expenditure is only enhanced under the SME scheme but not RDEC.

When submitting an R&D tax credit claim there is a wide variety of expenditure that can be covered.

To help you make the most of this incentive please click on the headings below:

We often get asked whether businesses should make an investment in hopes that they can claim relief afterwards.

Thankfully, we can seek out advanced assurances from HM Revenue & Customs to ensure that if you meet the original brief for your project you are likely to receive the full benefit from this fantastic incentive.

What’s more, as this credit applies to the two previous accounting periods, if you have already completed work in the last couple of years you may still be eligible to apply, so why not get in contact to see if we can help.