R&D Tax Rebate Eligibility

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Many companies are eligible to claim research and development tax relief (R&D rebate), as there is currently a very broad definition in place within HMRC guidance as to what is considered to be classed as an R&D project.

CapEx Tax Specialists are here to help guide you through the process of claiming R&D tax relief, ensuring that all documentation needed is thorough and well-updated. Contact us today if you have any questions regarding R&D relief or if you need help with processing your R&D tax relief claim.

How Do I Know If I Am Eligible For R&D Tax Relief?

There are only two conditions that your company needs to meet to benefit from an R&D tax rebate. To benefit from research and development tax relief you must:

Be a limited company within the UK that is subject to corporate tax
Have carried out qualifying R&D activities within the past year.

What Is Classed As A Qualifying R&D Activity?

There is no set definition for what an R&D project needs to look like as long as you are a limited company and you meet the criteria described above any activities you have carried out relating to a scientific or technological advancement and you have paid expenses to carry out these activities then you should qualify for an R&D tax rebate.

For example, an R&D project may be structured as follows:

You should first outline the limitations of your current knowledge, explain why you are carrying out the project and what you plan to achieve in doing so.
Then you can hire the staff needed and purchase the resources required to carry out the research and development project. This can involve both problem-solving or trial and error processes.
If there is a positive outcome of your project then you can end the process by implementing the new knowledge across your business or sector.

When applying for research and development tax relief you must identify the limitations or problems that your business is facing or attempting to overcome through the R&D processes. Throughout the year you can have one or more R&D projects that can be run at the same time or one after another.

What Documentation Do I Need In Order To Make An R&D Tax Rebate Claim?

If you want to claim for R&D tax relief then you need to have thorough documentation to hand that details the qualifying activities and costs of the project overall.

It is wise to keep a record of spending as they are made throughout the project. You will also need to provide timesheets for any member of staff hired to work on or oversee the project and provide a log of the successes and failures the project has revealed. This is alongside providing evidence of the current limitations or reasons for undertaking the project in the first place.

Once the process has been completed clear record keeping then becomes necessary to prove the credibility of your research and development tax relief claim and of future claims you may wish to make.

What Can I Claim For Against An R&D Project?

There are different types of claims that you could make upon completion of an R&D project, these include:

R&D Tax Credits – This is a corporate tax relief which will reduce the company’s payable tax or provide a full sum payment

Grant Funding – Your business could be eligible to receive a non-repayable sum for specific projects depending on their innovative incentives.

Patent Box – A patent box is a lower rate of corporation tax on any profits that were made from patented inventions.

Capital Allowances – You could pay zero tax for any expenses related to R&D activities.

How Much Could I Claim From An R&D Tax Rebate?

How much you can claim from an R&D relief claim depends on how big your company is. SMEs can claim up to 33p per £1 spent on R&D projects before April 2023 or up to 27p per £1 for all R&D spending made after that date.

Larger companies can claim up to 16p per £1 spent on R&D activities after April 2023 or 11p per £1 spent before that date.

Any money that has been successfully claimed back from an R&D tax rebate can significantly help a business to grow as the money can be used to grow the teams or be put towards another R&D project, further reducing costs and expenses.