Research and Development Credits are a Government incentive scheme designed to encourage innovation by rewarding UK companies with Tax Relief on their Corporation Tax Bill if they carry out innovative activities.
If your company has created new or enhanced existing products, undertaken any work to improve processes or made improvements in services in order to reduce costs, win more business or improve service levels, you could qualify for R&D Tax Credits.
Depending on the circumstances of your business and your R&D project there are two schemes that you can apply for.
If you have spent money on qualifying innovative activities in the past two years you can reduce your company’s corporation tax bill an extra 86% of the amount you spent on the innovation.
Our calculator can give you a quick estimation of your potential R&D tax relief saving. Our worked through examples explain in more detail how this will impact your finances.
For every £1 spent on R&D activities businesses can claim back up to 16.2p in R&D tax relief.
view exampleFor every £1 spent on R&D activities Profit making Companies can claim back up to 21.5p in R&D tax relief.
view exampleLoss making businesses can carry forward/back an enhanced loss (86%) which means for every £1 on R&D activities spent you will receive 35.34p in tax relief.
view exampleIn the simplest terms for a project to qualify under the SME Research and Development Tax Relief Scheme it must represent an advance in a field or science that involved Scientific or technological uncertainty and challenges to overcome.
This is when knowledge of whether something is possible, feasible or how to achieve it in practice is not readily available or deducible by a competent professional working in the field.
Take a look at the examples below to see if your project qualifies:
All costs spent on the Research & Development activity will qualify for a claim in the relevant tax year they were incurred in.
Frequently Asked Questions
SMEs can benefit from an enhanced rate of R&D tax credits compared to larger businesses. For a company to be regarded as an SME and qualify for this scheme it must meet the following criteria:
- Must be a UK Limited Company
- Must employ fewer than 500 people
- Have either an annual turnover of no more than £100 million or a balance sheet total not exceeding £86 million.
There is a 2 year time limit to how far back you can make a claim on incurred R&D expenditure. The date that the costs were paid must have occurred within 2 years starting from your current company year end date.
For Example - If your company tax year end date is the 30th June 2018, you can claim any qualifying R&D costs incurred going back to the 30th June 2016.
If your Research and Development projects spans multiple years we will help you to make a separate claim for each year including the respective qualifying expenditure. The total tax saving will be the same result as if the project fell into one tax year.
The amount of the SME payable R&D tax credit that a company can receive in any one year will be capped at £20,000, plus three times the company’s total PAYE and NICs liability. This measure will apply to accounting periods beginning on or after 1 April 2021.
Companies are able to make a claim for their R&D projects whether they were successful or not. The R&D Tax Relief does not discriminate between the two as it aims to encourage businesses to innovate. The scheme therefore helps businesses to mitigate some of the financial risk involved in research and development.
Research and Development can take place in any industry or business at any scale.
See below some of our previous successful R&D claims:
Conveyor company claimed for a portable conveyor system which allows for ease of access to basements with limited access.
Flooring company claimed for a cold joining system that allowed for endless flooring complete with mobile delivery system.
Waste Processor successfully claimed for work carried out on decontaminating waste drilling cuttings from deep sea drilling.
Online gambling software developer successfully claimed for software to monitor gaming over three platforms.
Food packing company claimed over last three years for the innovations they made in the design of it’s packaging.
Building company claimed for improving their current production process for pre-fabricated building construction in their factory.
Horticultural company claimed for the design of a soil sifting and drying process, which helps in the cleaning of contaminated soils.
They successfully claimed for improvements to their PFA brick production plant, which increased production by 35% and reduced wastage by 95%.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form
To find out if your project or innovation qualifies under the R&D SME scheme and how it can help your business, get in touch for a Free, No Obligation Evaluation. Start claiming R&D Tax Credits today.
Free EvaluationResearch and Development Tax Credits are a Government incentive scheme designed to encourage innovation by rewarding UK companies with reductions in corporation if they carry out Research and Development activities. The UK has one of the most generous schemes with an estimated £6 billion budget per year available to be reclaimed by SMEs.
R&D tax credits enable companies that incur costs in developing new products, processes or services to receive a cash payment or tax deduction. The average annual claim for an SME claimant, across the UK, is over £46,000. R&D tax credits can therefore be an incredibly valuable source of funding for many businesses, with up to 33.35% of a company’s R&D spend being available as a cash repayment from HM Revenue & Customs (HMRC).The R&D tax credit scheme is a HMRC incentive designed to encourage innovation and increased spending on R&D activities by companies operating in the UK.
The scheme effectively allows you to claim back the tax paid on any associated costs with a project you have undertaken that qualifies as Research or Development whether this be through reducing your Corporation tax bill or by giving you a Tax Credit back.
The Government has expressed its desire to make the UK the most attractive place to start and invest in innovative companies and as a result the incentives for companies to innovate have continued to improve.R&D tax credits were first introduced in 2000, although only available to SMEs initially, so this is not a new form of tax relief. However, in recent years the rates have increased significantly to further incentivise companies to claim (see below for details).A parallel regime followed for Large Companies in 2002 and the Research & Development Enhanced Credit (RDEC) scheme for Large Companies was introduced from 1 April 2013.
Under the SME scheme you can claim for various costs, some of which you may not think of.
Other expenditure such as travel & subsistence, car hire & motor costs and telephone costs are usually not allowable for R&D tax relief purposes.
Research and Development Credits are a Government incentive scheme designed to encourage innovation by rewarding UK companies with reductions in their Corporation Tax Bill if they carry out innovative activities. The UK has one of the most generous schemes with an estimated £6 billion per annum available to be reclaimed by SMEs.
SMEs can benefit from an enhanced rate of R&D tax credits compared to larger businesses. For a company to be regarded as an SME and qualify for this scheme it must meet the following criteria:
There is a 2 year time limit to how far back you can make a claim on incurred R&D expenditure. The date that the costs were paid must have occurred within 2 years starting from your current company year end date.
For Example - If your company tax year end date is the 30th June 2018, you can claim any qualifying R&D costs incurred going back to the 30th June 2016.
Other expenditure such as travel & subsistence, car hire & motor costs and telephone costs are usually not allowable for R&D tax relief purposes.
Other expenditure such as travel & subsistence, car hire & motor costs and telephone costs are usually not allowable for R&D tax relief purposes.