In some cases, an R&D Tax Credit claim can represent as much as 33% return on investment of an R&D project!
You would be surprised at what qualifies for Research & Development, R&D tax credit. It’s not just about people in white lab coats!
R&D tax credit, often known as R&D tax relief, is the government’s way of supporting and rewarding companies that are developing new, or improving existing products, processes, services, devices, and materials or advancing the state of knowledge in their sector.
It’s well worth investigating, in some cases the tax relief itself could represent as much as 33% return on investment for the R&D project!
R&D tax legislation is complicated, but our team are experts and will do all the hard work for you. We’ll look at every aspect of your business and identify all qualifying activity for you.
Making an R&D tax credit claim
R&D tax credit can be claimed for up to two years from the end of your accounting period. This means that once your business enters a new tax year, you are no longer eligible to claim for any projects that took place more than two years ago.
Research carried out found that although around 800,000 businesses are likely to be eligible for R&D tax credit, just 8% are claiming it!
How do R&D tax credits work
In order to qualify for R&D tax credits, the company must account for Corporation Tax.
R&D tax credits are available for companies that are either making a loss or are in profit.
Typical qualifying costs
- Staff costs – gross pay, employer NIC, employer pension
- Externally provided workers
- Materials consumed
- Heating, lighting and water
- Payments to clinical trial volunteers
Typical qualifying activities
- Software development
- Failed & successful projects
- Development of innovative recipes
- Development of innovative formulas
- Development of new materials
- Improved processes
- Development of new & improved products
- Development of environmental products
Essentially anything that helps you gain a competitive advantage in a new and innovative way could be eligible for tax relief. The tax laws around R&D tax credits are complicated, and the criteria for eligibility may seem ambiguous. In order to get the largest tax relief return, you need to have an expert on your side.
Businesses from diverse industries have claimed. Here are some examples of sectors and average claim size as quoted by the HMRC:
- Agricultural £42,857
- Professional, Scientific & Technical £64,236
- Construction £46,392
- Accommodation & Food £22,222
- Manufacturing £43,419
- Information & Communications Technologies £51,075