YOUR APPROVED QUICK GUIDE TO R&D TAX CREDITS
- Mark Kozo
- Oct 26, 2023
- 2 min read
Updated: May 28, 2024
Your company can claim R&D tax relief if you have undertaken activities which meet the 'R&D technical criteria' essentially, the criteria requires 'projects' to seek an advance in science and/or technology through the resolution of scientific and /or technological uncertainty. The key to identify and maximise an R&D claim is thorough understanding of the criteria and the associated eligible costs.
What are R&D Tax Credits?
Research and Development Relief (R&D) are tax credits designed by the government to encourage investment in Research and Development activities as well as other innovative activities. If you’re spending money on developing a new process, product or service either internally or for a customer, you could qualify. The range of businesses carrying out the qualifying activity is ever-expanding. If you employ people who work on projects that advance knowledge and clarify uncertainty you may also qualify.
You may be carrying out qualifying R&D activity if you; Design New Products, Develop New Services, Create New Processes, Adapting Existing Processes or focus on Product Innovation.
Please contact our specialist team if you believe your business may be carrying out R&D activity.
R&D Tax Credit Schemes
R&D Sectors:
As with the type of activity carried, out HMRC has broad criteria for what qualifies as R&D in many industry sectors. If your business is investing in finding solutions to scientific and technological problems, you may be carrying out a qualifying R&D activity.
Click here to explore some of our specialist sectors; Construction, Engineering, Manufacturing, Food and Drink, Automotive, Fintech, Hydrogen Production, and Media & Telecommunications.
Frequently asked question:
Are R&D expenses tax deductible? -
R&D claims aim to either reduce the amount of profits subject to corporation tax or increase tax losses. You’ll need to work out all of your qualifying expenditure for the project in order to claim.
How to qualify for R&D Tax Credits? -
To qualify for the scheme, UK companies must have R&D projects that aim to work towards scientific or technological advancements in new or enhanced products, services or processes in their field.
How much can we get? -
How much you can claim for depends on your company size. SMEs can claim an effective 14-33% on qualifying costs. For large companies, a tax relief credit of effectively 8.8% is available under the Research and Development Expenditure Credit scheme
How far back can I claim for R&D Tax Credits? -
You may claim for qualifying expenses made in the last two accounting periods of the company.
Are there any risks?
It is worth remembering why the relief was introduced. HMRC introduced the scheme in order to incentivise innovative a efforts by companies to overcome scientific, technical or even business related challenges through the creation and enhancement of solutions/products.
Having said that, there is always the possibility that HMRC conducts an enquiry into an R&D tax relief claim, which could be through a random selection process.
However, only a very small percentage of our client's claims have been subiect to an enquiry. We have the industry experience as well as knowledge of the legislation and employ qualified engineer researchers and scientists to ensure our claims are accurate and justifier.
