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Research & Development (R&D) Tax Claims & Credits

Claim Research and Development Tax Credits – Boost Your Cash Flow And Reduce Your Tax

Research and Development tax credits are often misunderstood and under-claimed because many people wrongly believe that the government incentive doesn’t apply to their business. However, the truth is most trading businesses are eligible to claim.

If your business has ever created something new, improved something that already exists or otherwise overcome an uncertainty, then you could qualify for an R&D tax credit.

Lots of different types of businesses – small, medium and large – can claim R&D tax relief and receive a cash rebate of up to 33% of the costs that relate to an activity that meets the eligibility criteria.

Any business could potentially claim R&D Tax Credits

You don’t have to be a “mad scientist in a white lab coat” to put in a claim.

The criteria can include costs that are incurred as a result of significantly improving existing technologies, systems and processes. That is incredibly broad and could apply to a lot of businesses. Also, your claim could include a wide range of related costs, including the payroll cost of the people involved in the R&D work.

Is it hard to put in an R&D tax credit claim?

Understandably, this is a popular question we hear from businesses. No one wants to waste time putting in a claim if it involves more time and cost than what you could receive as a rebate. Thankfully, the answer is no. It’s not hard to put in a claim for R&D tax credits because we do all the hard work for you and deal with HMRC on your behalf.

What are R&D Tax Credits?

Many businesses are unaware that Research and Development tax credits even exist. Or, if they are aware of them, they may be thinking they can’t put in a claim because they’re not involved with the rather mysterious-sounding “research and development”. This is not true.

A typical example would be a pharmaceutical company seeking to develop a new medicine. In this example, let’s assume that it is a more effective painkiller than what’s currently available on the market. Obviously, a great deal of time, human and financial resources will need to be allocated to this project. The use of these resources is known as research and development, so they are eligible for an R&D tax credit.

Who is Eligible for R&D Tax Credits?

This is the important thing to keep in mind: R&D is not limited to the pharmaceutical industry or scientists in lab coats.

It is this common misconception that steers people away from applying for R&D tax credits. R&D tax relief has a much wider scope than most people realise, and you should not be put off by thinking such relief is reserved solely for mad professors.

And, R&D tax relief can, in some cases, even be claimed on unsuccessful R&D projects!

What are the criteria for R&D tax relief claims?

Just as with capital allowances, we often find that R&D tax credit is under-claimed because businesses don’t think they meet the criteria, which means vast numbers of businesses are missing out on some quite significant tax relief.

But the criteria are in fact very wide. R&D tax relief is available to any business that invests resources into research and development. The question is, what business activities qualify as research and development?

To list every possible project that could qualify for R&D tax relief would make this page rival the page count of that of Leo Tolstoy’s War and Peace. However, according to the gov.uk website, to get the R&D tax relief you need to explain how a project:

  1. Looked for an advance in science and technology
  2. Had to overcome uncertainty
  3. Tried to overcome this uncertainty
  4. Couldn’t be easily worked out by a professional in the field

SMEs and large companies may also be able to apply for Research and Development Expenditure Credit if they’ve been working on an R&D project for another company e.g. as a contractor.

As you can see, those four criteria are very broad in nature and could apply to all sorts of businesses working on all sorts of ideas, products and services. If you’re not sure they apply to you, give us a call and we’ll determine that for you.

What is SME R&D Relief and can I claim it?

There is also something called “SME R&D Relief” to consider.

If you’re a small or medium-sized enterprise, you might be able to claim SME R&D relief if you have fewer than 500 staff a turnover of under €100m or a balance sheet total under €86m.

(Source: gov.uk)

Providing these criteria are met, you could save thousands in tax relief. From our experience, the criteria can often be met in seemingly unlikely projects.

How do I Apply for or Claim R&D Tax Credits?

Our tax advisors have the specialist knowledge and extensive experience to be able to figure out very quickly if you meet the criteria and can put in an R&D claim. If you can claim, we will achieve the very best result for you. The intricacies and finer details of R&D tax credits can be complex, so a professional approach that comes from a position of understanding is essential.

Our process starts with learning about your business and the nature of the projects it’s involved in. Once we’ve established a thorough understanding of your business and its activities, we can review and identify areas that qualify for R&D tax credits.

After ascertaining that you are eligible, we can begin the process of providing you with the best possible tax advice and savings. You really could be missing out on thousands of pounds worth of unclaimed R&D tax credits!

Find Out More About Claiming R&D Tax Credits

To find out more, or claim research and development tax credits, please contact one of our friendly advisors.

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