Goldsmith Hall,

London W1H 1DP

03330 148 466

Goldsmith Hall,

London W1H 1DP

03330 148 466

R&D Tax Credits Guide

What are R&D Tax Credits?

R&D Tax Credits are a tax incentive put in place by the Government for research and development projects, allowing businesses to reclaim up to 33% of their R&D costs, even if the project fails.

The money is paid back to the company in the form of a Corporation Tax refund, or as negative corporation tax, after the end of the financial year. The payment is tax free and businesses are free to use the money as they wish, with many businesses opting to use it to buy equipment or pay out dividends.

As of 30 June 2020, £5.3bn of R&D tax relief support has been claimed for 2018-19, corresponding to £35.3bn of R&D expenditure. (source: gov.uk)

Innovate UK R&D tax reclaims

Types of R&D Tax Claims

1. Small and Medium sized Enterprises (SME) R&D Relief

You can claim SME R&D relief if you’re an SME with:

  • Below 500 staff
  • Turnover below 100 million euros, or a balance sheet total under 86 million euros

2. Research and Development Expenditure Credit (RDEC)

Larger companies, with over 500 staff, are able to claim a Research and Development Expenditure Credit (RDEC) for their R&D projects.

How our R&D Tax Credit Process works

We make it incredibly easy to claim R&D Tax Credits. After all, we understand that life is incredibly busy, so we want to make it as easy as possible.

Here is a closer look at the what is involved in the process. It really is as easy as 1,2,3.

Step 1: Invest money in an R&D project

Step 2: Make an R&D Tax Claim

Step 3: Reclaim up to 33% of all the R&D project costs

All businesses should be aware that they are able to claim for the last two financial years and if you are yet to make a claim, you might be eligible to claim back the refunds from those two years. Please note: if your company has already paid the tax, then you’ll receive a rebate from HMRC.

And, once you have made your initial claim you can also keep using the scheme every year moving forwards, as long as you can provide evidence that you are still conducting research and development work.

Why R&D Tax Credits so important?

R&D tax credits are important for a whole host of businesses, working across a diverse range of sectors. In fact businesses in any industry, whether profitable or those making a loss, can benefit from reclaiming R&D tax credit, as long they are conducting eligible work such as developing new products, processes, technology or services. Why? The HMRC is dedicated to stimulating investment in innovation as it has been proven to be a key growth factor when it comes to initiating economic prosperity.

Businesses of all shapes and sizes are eligible. Here’s a closer look at some of the many benefits that come hand in hand with R&D tax credit:

Benefits of R&D Tax Credits:

  • The application process is incredibly simple and only takes between 6 – 8 weeks for you to receive funds once your claim is approved, this is providing all information is provided in the correct format and up to date.
  • R&D tax credits are eligible for loss-making companies
  • Boosts the UK economy by investing in innovation
  • All businesses are able to claim on R&D activities for the current and previous two financial years.
  • You can use the funds in a way that works for your business, whether that’s investing in new equipment or hiring a new member of staff.
  • There’s no minimum claim value
  • Doesn’t apply to Limited Liability Partnerships and charities;

What CAN be claimed for:

There are a whole host of things that businesses can claim for as part of the R&D initiative:

  • Utilities
  • Prototypes
  • Subcontractors
  • Software
  • Salaries
  • Wages
  • Consumable item
  • Pension fund

What CANNOT be claimed for:

At the same time, you should be aware of the things that you cannot claim for:

  • Rent
  • Travel expenses
  • Cost of land
  • Patent and trademarks
  • Production and distribution
  • Capital expenditure
  • Dividends
  • Recruitment

How to claim your R&D Tax Credit

Our process is simple and there are only 4 steps to successfully complete an R&D claim.

Step 1:

Initial call – This involves a short, stress free phone call with a member of our team in order to establish whether or not you are eligible for R&D tax activities.

Step 2:

Completing your application –  When completing your application, it’s important to provide all details of qualifying activities and processes, including a technical analysis.

Step 3:

Making your submission to HMRC –  This involves providing the tax relief value and completed technical and financial documentation to HMRC.

Step 4:

Receiving your benefits –  The HMRC will then review your application and providing everything is in order and they are satisfied that it is a valid claim, you’ll receive your entitlement.

When does an R&D project start and end?

When submitting your application to the HMRC, it’s important to let them know when an R&D project starts and ends. This information is required to ensure that a company claims the right amount of tax credits.

Eligibility Checker

To be able to claim R&D tax credits, you must meet the following criteria:

  • Developed or prototyped a new product or device
  • Spent money on R&D project
  • Developed or improved software
  • Be a qualifying UK based company
  • Be subject to Corporation Tax
  • Developed or improved software

If you are unsure whether or not you are eligible for R&D tax credits, it’s always worthwhile to Get in Touch and we can quickly determine your claim eligibility and potential value, for no charge.

What do I need to start my R&D claim?

Before submitting your claim, it’s important that you have the following information to ensure that the whole process is as seamless as possible.

  • You will be asked to provide supporting evidence that that will allow you to put the claim forward
  • You will need to provide a thorough summary of the work undertaken as part of your R&D project
  • Timeline of work including the proportion of time involved in each stage of the project
  • A breakdown of the expenses that are eligible for a relief
  • Outline all staff involvement including any hands-on technical input on qualifying projects
  • UTR – 10 digit company unique tax number.

Choosing an R&D Tax Specialist

We’re experts when it comes to helping businesses of all shapes and sizes claim the money they are owed from R&D tax credits. We have a 100% success rate and have the technical knowledge and understanding of R&D legislation needed to ensure we are providing the very best results.

All of our professional tax specialists manage the claims process from start to finish, whilst liaising with HMRC on your behalf in order to maximise your claim value. Having worked with a diverse range of businesses across lots of different sectors, we understand your business structure and have the general tax and financial knowledge required to optimise your claim.

After all, a poorly submitted R&D tax relief claim can lead to an HMRC audit, which can then lead to losing an entire tax credit.

Get in Touch Today and we can quickly determine your claim eligibility and potential value for you, for no obligation.