In 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 of uncertainty and technical challenges to overcome.
Take a look at the definitions below to see if your project qualifies:
The project must involve Scientific or Technological Uncertainty that you were attempting 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.
If your company has undertaken any of the above you could qualify for R&D Tax Credits.
Get a Free R&D EvaluationFrequently 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%.
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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.
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The criteria for whether a project qualifies for the scheme is all down to whether it is considered a "Research & Development" activity. This is not a straight forward criteria and has little clarification from the HMRC. This often means that the judgement from the individual tax offices and investigators can vary from area to area. This means it's evermore important to provide a detailed supporting technical document with each claim.
For this tax, the qualification of "Research and Development" should not be considered necessarily in it's everyday meaning as here it is really the embodiment of criteria, case studies and grey areas.
To start off the process of qualification you need consider whether your company has undergone any innovative activities:
If your company has undertaken any of the above you could qualify for R&D Tax Credits.
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: