Can you claim for R&D Tax Credits every year? 2018-04-05T10:40:32+01:00
R&D tax claims

Making an R&D tax credit claim

In April 2000, the government introduced research and development tax credits for businesses who seek to achieve scientific or technological advancement through innovation. The nature of this work is often integral to the way the company operates, as continuous evolution is needed to improve a product or service to meet varying needs. As such, an R&D tax credit claim can be made every year so long as innovation is occurring.

Filing a claim each year

The same R&D claim, however, can’t be filed year in, year out. As your developments advance, so should the technical narrative. Each year, you should detail any new R&D undertakings, even if they apply to the same project, and the narrative must be different enough that it forms a suitable claim.

Qualifying R&D costs

Qualifying R&D expenditure encompasses a range of costs throughout the lifetime of the project. These include certain staff costs, such as salaries or pension fund contributions, materials, utilities and a proportion of subcontractor costs.

The first phase of an R&D undertaking typically requires the biggest outlay, so tax relief may well drop following this phase. When more salespeople, administrators or customer support staff are employed, and fewer developers, the overall percentage of expenditure applied to R&D will decrease.

In certain circumstances, however, the qualifying costs may increase even after years of operation. For example, if a product has to be redeveloped or technically upgraded.

Calculating your claim

When making an HMRC R&D claim, you should enter your enhanced expenditure into the CT600 (Company Tax Return) form. In order to calculate this expenditure, take into account:

  • Costs that can be attributed directly to R&D
  • Subcontractor or external staff provider payments, which should be reduced to 65% of the original cost

These costs are then added together, multiplied by 130% and added to the original R&D expenditure. The result is then entered into the tax return. Note, however, that if your business is loss making, the enhancement is slightly different.

To be certain that your R&D tax credit claim is calculated correctly, it’s advisable to speak to a tax advisor. At R&D Tax Solutions, we specialise in helping businesses reduce their tax burden through claiming R&D tax credits. Not only can we assist with your claim and advise on the provision of supporting documentation, we can also manage the process and liaise with HMRC on your behalf. Contact us today on 0161 298 1010 or visit our office in Manchester to find out how we can help.

Average R&D tax claim is £56,000

Ask us to review your R&D tax relief claim on your behalf. With our unique fee strcuture you don't pay us a penny until your R&D claim succeeds and provides a benefit to your business!

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