R&D Tax Credits Explained – How Can ThisTax Relief Benefit My Business?

When the R&D tax credits scheme was brought in by the government in 2000, it was a welcome benefit for many businesses. However, HMRC statistics suggest up to 90% of companies could be missing out on what they’re owed. This could be through lack of understanding about the scheme or not even knowing it exists.


What are R&D Tax Credits?

Intended as an incentive for UK businesses to become more globally competitive in the fields of Science and Technology, R&D tax credits were brought in to reward innovative businesses. This means companies investing in R&D (research & development) aimed towards technological advancements in products, services or processes, can receive a significant financial boost.


How to Claim R&D Tax Relief 

The claims process takes place via HMRC, who will give businesses either a relief in a reduction of their Corporation Tax owed (if profitable), a cash sum (if making a loss), or a mix of the two. There are two schemes available; the SME scheme for businesses with under 500 employees and a turnover of €100million (or a balance sheet under €86million) and the Research and Development Expenditure Credit (RDEC) scheme for larger businesses. You can reclaim up to 33% for eligible project expenditure, and you can even calculate R&D tax relief owed before starting the process.

To make a claim, you’ll need to meet certain criteria.

  • Create a report detailing your project and why there was technological uncertainty in this particular area. You’ll also need to explain why no competent professional in the field had the knowledge or capabilities to make the advancement you were seeking.
  • Only claims for the company’s last two accounting periods can be submitted.
  • You must be liable for Corporation Tax and have a UK LTD company to be eligible under the scheme.
  • Work out your costs involved.This could be for things such as staff wages, subcontractor costs, software and consumables directly involved in the R&D project.


Finding More Information on R&D Tax Credits 

Making a claim for R&D tax creditsdoesn’t have to be stressful. The government wants to reward those businesses investing in innovation, so you need to claim everything you deserve. You can submit your application yourself, but others choose to use a specialist. R&D tax relief experts are there to support and advise businesses throughout the process. They’ll provide you with answers to any questions you have and check your eligibility before you spend time filling out your claim. They can also claim for R&D tax credits on your behalf, are completely up to date with HMRC legalisation and have often built a good relationship with assessors.This can save businesses time, maximise their claim and ensure their application is successful on first submission.

R&D tax credits create a positive business cycle, helping with scientific and technological advancements across a variety of industries while giving UK businesses a financial boost. Don’t miss out if you think you have a claim for R&D tax relief.

Leave a Reply