R&D Tax Credits
If your company is investing in research and development, you could be eligible for claiming Research & Development Tax Credit. It doesn’t matter what sector you’re in or the size of your business, every investment into research and development is eligible for a tax return.
Is your business eligible for R&D Tax credits
Many UK businesses are unaware of how much they are truly entitled to, whether tax credits, refunds, exemptions, reliefs or business grant funding. To qualify for R&D tax credits, you must meet the following criteria:
You must also meet the necessary criteria outlined by the UK government. There are currently two types of R&D schemes in the UK; the SME scheme for small & medium-sized enterprises, and the Research and Development Expenditure Credit (RDEC) regime for large companies. The benefits differ based on the category your business falls under.
R&D Credits Explained
Claim Up to 33% of your R&D Costs
The amount you can claim back for research & development depends on a number of factors, including whether you fit into the SME scheme (for smaller businesses) or the RDEC scheme (for larger companies). Even once this has been determined, the percentage of R&D costs you can claim back varies depending on whether your business in making a profit or a loss. The maximum amount you can claim back, if your business qualifies for it, is 33% of any money spent on qualifying R&D activities.
Unsure what R&D tax credits your business can claim? Speak to our tax specialists for tailored advice from our knowledgeable team.
Which Costs Qualify for R&D Credit Tax?
Speak to an experienced tax advisor for detailed information on all the qualifying costs within your business. Just a few of the costs that could be eligible for R&D tax credits include:
All staff costs involved in the project are typically eligible for R&D tax credits. This includes wages (plus any overtime), NI contributions, and pension contributions.
Certain eligible expenditures involved in developing or improving software required for R&D projects may qualify for tax credits.
This refers to anything that is used, or ‘consumed’, within the project. It includes water, fuel, power, and materials.
If you need to outsource some of the research to third parties, these expenses may also be eligible for corporation tax relief. Speak to an expert about your circumstances.
What Are R&D Tax Credits
WHAT ARE THE R&D CREDIT TAX RATES
Current R&D tax credit rates mean SMEs can claim up to 33p for every £1 on qualifying R&D activities while large companies can claim up to 10p on every £1 spent.
The average cashback to companies is around £50,000 and most companies don’t even realise that much of what they do is eligible.
HOW TO CLAIM R&D TAX RELIEF
To claim R&D tax relief your business will have to showcase how their work and project:
- Attempted to achieve an advancement in science and technology (whether successful or not)
- The Business overcame uncertainty or tried to do it
- Could not be easily worked out by a professional in the field
- The work/project completed by your business must involve developing or improving a process, product or service in order to be eligible for R&D relief.
Whether you own a small business in the West Midlands or a nationwide company with branches across the UK, CapEx Associates can assist you with applying for and claiming R&D Tax Credits.
R&D Credits FREQUENTLY ASKED QUESTIONS
R&D tax credits vary depending on your Research and Development spend. To make an R&D credit calculation, you need to identify your “enhanced expenditure”. Once you deduct your enhanced expenditure from your taxable profits or add it to your loss, it will result in:
- A Corporation Tax reduction if you are making a profit
- A cash credit if you are incurring losses
- A combination of the two
There is now a R&D tax credit cap, which means that businesses are able to claim tax credits up to £20,000, plus 300% of its Pay as You Earn (PAYE) and National Insurance Contributions (NIC).
Latest News Our Insights
Find how shared ownership can affect your stamp duty liability and whether you may be eligible for a refund. Enquire online with CapEx Tax.
Wondering how long a stamp duty refund takes to process? Read our guide on how to check, and let us take you through the process step by step.
Find out if you are eligible for a refund on your stamp duty in the UK. Learn about the criteria for eligibility and how to apply in our guide.