r&D CLAIMs
WHAT IS R&D TAX RELIEF?
R&D reliefs support companies that work on innovative projects in science and technology, but other types of innovation also qualify. The incentive is to encourage innovation and increase R&D and spending on R&D by companies in the UK.
It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects, companies that are making a loss and companies who haven't yet commercialised their innovation.
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It’s one of the government’s top incentives for encouraging investment in research and development and allows a significant portion of a company’s R&D spend to be recovered as a cash repayment if the company is loss-making.
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You may be able to claim Corporation Tax relief if your project meets HMRC's definition of R&D.
Many businesses don’t realise that they qualify for R&D Tax Credits or that they are not claiming their full entitlement.
QUALIFYING FOR R&D RELIEF
The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It can’t be an advance within a social science like economics or a theoretical field like pure maths.
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The project must relate to your company’s trade - either an existing one or one that you intend to startup based on the results of the R&D.
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To get R&D relief you need to explain how a project:
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looked for an advance in science and technology
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had to overcome uncertainty
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tried to overcome this uncertainty
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couldn’t be easily worked out by a professional in the field
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From 1 April 2023, some SME's will be limited to claim a refund of no greater than £20,000 plus 300% of their PAYE and NIC payments. This doesn't apply to SME's who do not receive a refund but receive the benefit of a reduced corporation tax payment.
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R&D RELIEF FOR SMALL COMPANIES
You can claim as an SME if you’re an SME with:
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less than 500 staff
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a turnover of under €100m or a balance sheet total under €86m
You may need to include linked companies and partnerships when you work out if you’re an SME.
SME R&D relief, from 1 April 2023, allows companies to:
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Deduct an extra 86% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 186% deduction
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Claim a tax credit if the company is loss making, worth up to 10% of the surrenderable loss
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WHAT IS R&D TAX RELIEF WORTH TO AN SME?
For accounting years ended before 31 March 2023, if you are an SME who have spent £20,000 on qualifying R&D expenditure:
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If you are profit-making, your corporation tax will be decreased by £7,086 if your corporation tax is at 19%
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If you are loss-making, you can apply for a cash payment of £3,720 assuming you meet the refund criteria
These will be significantly reduced for accounting periods after 31 March 2023 and will take effect as soon as legislation is enacted.
HOW LONG DOES IT TAKE?
We typically suggest you plan on 8 to 12 weeks, split equally between preparing the claim and giving HMRC to review it.
A well-prepared qualifying application will take 4 - 6 weeks for HMRC's dedicated R&D Team to process.
OUR FEES
One of our experts will have a free-of-charge conversation with you to understand your business, your R&D and the expenditure. We will write a brief report for you and suggest wither you qualify or not as the case may be.
If you decide to proceed, our fees are payable on a contingency basis at 20% of the corporation tax effect you receive from R&D. So if the claim is unsuccessful, you have nothing to pay.
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If you or your company for other tax or accounting matters, our fee is reduced from 20% to 15%.