The main facts about R&D Tax Credits
R&D (Research & Development) Tax Relief can seem like a complex area when first considered, leaving thousands of companies not claiming what they’re owed. Here at R&D Tax Solutions we’ve broken down some of the main facts about R&D tax credits to make things easier to understand.
How does R&D Tax Relief work?
R&D Tax credits were originally brought in by the government to reward UK companies for innovation in the areas of Science and Technology. Eligible projects across any sector can use the scheme to reduce their Corporation Tax bill or receive a cash sum.
What counts as R&D?
For a project to qualify for the R&D tax relief, it needs to demonstrate its work towards scientific or technological advancements which could include:
- a new or improved service
- a new or improved product
- a new or improved process
Sectors that can claim for R&D tax relief cover a whole variety of industries including Manufacturing, Food and Drink, Engineering, Aviation and Software, to name a few.
Am I eligible for R&D Tax Credits?
To be eligible to claim for R&D tax credits, there are certain criteria you must meet.
- You must be an UK LTD company liable for Corporation Tax (even if you’re not making a profit).
- The project must relate to the industry you’re in or intend to work in.
- There must be no such solution readily available on the market.
- You must be able to demonstrate that there is a level of uncertainty in your project.
- Your claim must be made within two tax years of money being spent on the project.
What R&D costs can I claim for?
You can claim for any qualifying expenditure that can be attributed to innovation. This includes staff wages, employer’s NIC, pension contributions, materials, consumables, external worker costs, and software. While it’s a complex area in HMRC’s guidelines, it may be possible to claim for some of the capital expenditure involved including equipment purchases, building work, extensions, renovations and property purchases.
Why not use our R&D Tax Credit Calculator to see how much you could potentially claim back.
R&D tax credits example
A company takes a new external application and integrates it with their current in-house system, creating a more robust process not currently existing in their field. The project isn’t just commercially innovative – the investment helped towards technological advancements by being the first bespoke process of its kind. The company applies to potentially reclaim 26% of qualifying costs through the R&D Tax SME scheme.
Need R&D Tax explained further?
If you think your business could be eligible to claim for R&D tax credits, you’ll need to submit through HMRC. However, their guidelines are incredibly detailed, so you may wish to seek expert advice to maximise your claim and ensure it is successful. Specialist services for R&D tax claim submission, as provided by R&D Tax Solutions, will offer you the help and support you need with no risk to your business. We offer a no win, no fee policy, have a 100% success record thus far and can explain the process in terms you’ll understand.
To get in touch, call 0161 298 1010 or email office@rndtax.co.uk.
