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:

CRITERIA 1

Be a limited company in the UK that is subject to corporation tax.

CRITERIA 2

Have carried out research and development in the field of science or technology.

CRITERIA 3

Have spent money in order to try to achieve the R&D goals

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

The R&D tax credit scheme was introduced in the UK in 2000 to encourage UK companies, both in profit or loss-making, to invest in R&D projects through the development, evolution or innovation using science and technology. The government realised that encouraging innovation is a way of improving productivity, performance and competitiveness in the UK.

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: 

Staff Costs

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.

Software

Certain eligible expenditures involved in developing or improving software required for R&D projects may qualify for tax credits.

Consumables

This refers to anything that is used, or ‘consumed’, within the project. It includes water, fuel, power, and materials. 

Research

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.

R&D Credits

What Are R&D Tax Credits

Research and development (R&D) tax credits are a government incentive rewarding UK companies that invest in the innovation of products, services and/or processes. It’s a valuable source of income that helps businesses accelerate R&D, hire new staff and encourage company growth.

R&D Rates

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.

R&D Claim

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

Businesses that spend money on developing/improving products, services or processes can claim R&D Tax Credit in the form of cash awards or corporate tax reductions.
R&D Tax Credits can be awarded to businesses in any sector, which is why the qualifying activities can range from developing products in a laboratory to refining specific manufacturing processes. The activities need to be carried out with the aim to advance science and technology and the project shouldn’t be easily solved or completed by a professional in the same field.

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).

Our Testimonials

“Very simple, a no-nonsense process which resulted in a very welcome injection of cash!”

“Very happy with the service. It’s so important to have the heavy lifting done by Cap Ex Associates Tax Ltd so we could concentrate on running the business”

“Fourth year of claiming and every year it gets 'more painless' and smooth with less disruption to the business.”

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Any Questions? Contact Us

With over 25 years of experience, we have helped clients big and small to claim government money through funding, reclaims and relief.

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