R&D Tax Relief |
R&D Tax Relief Explained – What Are They? Who is Eligible? |
Do you carry out innovation?
Many companies who are undertaking Research and Development are unaware that they are eligible to receive tax relief. Many companies do not even realise they are undertaking Research and Development!
One of the most pervasive misconceptions on this topic is that R&D tax incentives are only for those who undertake scientific research in a laboratory.
What are R&D Tax Credits?
Research and Development tax credits are a government initiative, designed to reward and encourage innovation in UK companies and to help grow the UK Economy.
If a company undertakes R&D, then they can take advantage of a Corporation tax refund or reduction, based on the costs of any qualifying projects over the last 2 financial years.
Who is eligible?
- Companies who are UK registered and are liable to pay Corporation Tax.
- SMEs (companies with under 500 employees, under €100million turnover and under €86million on the balance sheet) can claim under the SME R&D Relief scheme.
- Large Companies (over 500 employees, over €100million turnover and over €86million on the balance sheet) can claim under the RDEC scheme.
But what qualifies for R&D Tax Relief?
Whether you work in manufacturing, construction, software, or even interior design, if you are attempting to achieve an advancement in your industry, your company may qualify. Remember that R&D does not need to have been successful to qualify and that work undertaken on behalf of a client can also be considered.
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Total Amount of Tax Relief Received for Our Clients Since January 2017
What can be claimed for?
A percentage of the overall costs can be claimed back, amount dependent on whether or not you are loss or profit-making, large company or SME etc.
Costs that qualify include:
- Staff Costs – the costs for each individual staff member who has worked directly on the R&D project/s.
- Subcontractor costs – the costs for any subcontractors hired to work directly on the project/s
- Software costs – the cost of any software required for the project/s.
- Consumables – utility bills, wasted material costs – anything that was consumed during the project.
- QIA – Qualifying indirect activities, including the likes of training etc.
Latest R&D Success Stories
Lean more on Advance Assurance
In November 2015 HMRC introduced Advance Assurance for companies that are claiming or aim to claim Research and Development (R&D) tax relief.
If your company carries out R&D for itself and/or other companies, and don’t forget this covers a very broad spectrum, you could qualify for Advance Assurance. What this means is that for the first three accounting periods of claiming for the tax relief, HMRC will allow the claim without further enquiries.
The Manufacturing, Professional, Scientific and Technical, and Information and Communication sectors continued to have the greatest volume of claims, making up a total of 73% of claims and 75% of the total amount claimed for 2015-16.
T4C are business growth specialists with a focus on working with companies to access the funding arena with an aim to aid their growth aspirations. We undertake detailed analyses of each business we work with and have a range of in-house experts who can develop further growth opportunities across a variety of areas such as funding, access to finance, tax relief, training, and marketing.
Any organisations who think they may be eligible for R&D Tax Relief or have an interest in learning more about the services we offer can contact us by: