If your business is developing new products, processes, materials or services then you may be able to claim UK R&D tax relief.
Find out whether you can claim up to 33% of your R&D costs back.
What is R&D tax relief?
The UK Government’s Research and Development Tax Relief scheme is a way to encourage and reward companies that are investing in innovation.
How? If your company is profitable and eligible, you can benefit from a reduction in your company’s tax bill. Not yet profitable? Don’t worry! The UK will reimburse your R&D expenditure as a cash credit of up to 1/3 of the R&D expenditure. R&D tax credits can be claimed retrospectively for up to two years after the accounting year-end date.
What qualifies as innovation? For tax purposes, R&D takes place when you are creating something that will advance the overall knowledge or capability in a field of science and technology. In simple terms, if you are solving industry problems, creating new software, process or materials or anything that could be considered Intellectual Property, you qualify.
What costs qualify?
All industries, developing or improving new products, processes, or services, can be eligible for R&D tax credits.
There are many types of projects that qualify, but most projects will involve the development of new technology or services or novel applications of technology to scientific problems. If your company is taking a risk in attempting to resolve a scientific or technological uncertainty, then there is a good chance you are also carrying out R&D. Most importantly, the projects do not need to be successful to qualify. Once a scientific or technological problem has been identified, and a way to fix it sought, the work towards this goal will be eligible regardless of the result.
Eligible expenditure could include staff costs, agency workers, subcontracts, consumables, and/or software. We’ve found that many companies don’t understand the scope of things that may qualify as costs. This prevents companies from claiming R&D tax relief on them, and, as a result, potentially losing thousands of pounds or more in R&D tax relief. We will help you navigate this! Our industry sector R&D specialists know exactly what to look out for and will be sure to include it in your claim.
How to claim?
R&D tax credit claims are made through company corporation tax returns, with SMEs being able to claim up to 33p for every £1 spent.
A business can prepare and submit a claim by themselves. However, you must ensure that you understand exactly what type of expenditure qualifies under the R&D relief scheme and are able to present it in a way that satisfies HMRC. If not, the company runs the risk of their claim being queried or refused.
Over the years, we have perfected a template at Optimal Compliance that is compliant with HMRC requirements. Each report is written by our team of sector R&D specialists and accountants that know exactly how to shine a light on your innovative projects to secure the largest possible claim. Our team are experienced in claiming for a variety of clients, across a wide range of industries all over the UK. While you push the boundaries of science and technology, we push the boundaries of R&D tax relief so you can get rewarded for your innovation.
Put simply: say your staff spend 100 hours on R&D, up to one third of their salary can be paid for by the government to encourage further innovation. This is truly an amazing incentive and if you are an SME and wondering whether you are eligible, just complete our quick multiple choice eligibility checker for SME R&D Tax Relief.
We understand that often SMEs simply don’t have the time or the resources to organise making these claims themselves. This gave us a very intimate understanding of how the scheme works, where we can claim more or push a little harder. We also have quite a reputation for supporting our clients and ensuring that they are able to claim what they deserve so much so we even taken HMRC to the tribunal. The good news by doing so, we’ve helped establish a precedent and future claims have cited our case as proof.
1. Discovery and Research
Answering a short questionnaire may seem efficient, but won’t result in a particularly valuable claim. Our goal is to gain the maximum financial reward for our clients and to do that we will work with as many team members, systems and records as you have in place to identify all potential projects that may qualify for the R&D tax scheme.
2. Analyse and Develop
Once we have gathered the relevant research, our sector specialists will write a thorough technical report, using our unique Novel template that is formatted in an HMRC compliant way to minimise the risk of a claim enquiry. Thus, speeding up the time it takes to get your money.
3. Financial Analysis
Did you know that the majority of companies only claim back a fraction of their eligible costs? We want to avoid that, which is why our R&D specialists are expertly trained to identify all possible eligible costs to maximise your claim value.
4. Submit
We will prepare and submit your claim, to HMRC. Alternatively, we can work with your accountants or provide instructions for submission.
5. Collect
If your business is profitable and HMRC approves your claim, you will receive your benefit immediately! For loss-making businesses, the money will typically be paid directly into your bank account within four to six weeks.
What we can do for you
Types of incentives
The scheme also recognises that not every attempted R&D project succeeds and therefore does not discriminate against failed attempts, so the R&D expenditure will still be claimable so long as a genuine attempt has been made to resolve ‘uncertainty’. See below for different categories of R&D:g compliance of the LLP.
R&D Tax Relief/Credits
Relief: SME companies can benefit from a reduction in Corporation Tax equivalent to 25% of R&D expenditure, claimable for up to 2 years after the end of the relevant accounting period.
Credit: SME companies in a loss-making position can surrender those losses to claim a cash Tax Credit of up to 33% of R&D expenditure for up to 2 years after the end of the relevant accounting period.
RDEC scheme
The RDEC (Research & Development Expenditure Credit) scheme was introduced in 2013 to replace the previous Large Company Scheme for R&D tax credits. This scheme is less generous than the SME scheme with the net benefit at around 10% of the R&D expenditure. RDEC is designed for larger companies that do not meet the SME criteria. However, SMEs can also claim under the RDEC scheme if this is not possible under the SME scheme, for example when an SME receives notified state aid to fund an R&D project.
Patent Box relief
A reduced corporation tax rate of 10% is placed on profits stemming from patented technologies.
R&D allowances
Tax relief is available on 100% capital allowance for capital equipment and buildings used for R&D.
“Having worked with Optimal Compliance, it created a sort of paradigm shift in how we’re going to approach projects in the future. For Red Deer, claiming R&D tax relief helped hugely. We are now attacking unknowns head-on, which not only makes the projects we do a lot more interesting and widens the scope of our work, but we are also actively pushing the boundaries of what is architecturally possible.”
Lionel
Director
From the blog
Want to learn more about research and development and how it could impact your business? We’ve carefully curated the below articles from our blog to give you some more information.
What Are You Doing to Promote Innovation In Business?
Developing new products, materials, services and processes is key for business success, and doing so means you may also be eligible for benefits, which R&D tax experts can certainly help you with!
Around two thirds of eligible companies have never made an R&D Tax Relief claim
Although the government’s Research and Development Tax Relief Scheme was launched nearly twenty years ago in 2000, around two thirds of eligible companies have never made a claim; we’d like to change this.
Is your business eligible for an R&D tax rebate?
The government would like to pay a third of your R&D costs… Get in touch today to find out if your business is eligible for a tax rebate. We’d love to hear from you!
R&D tax rebate delays ‘preventing innovation’ in UK
Working with R&D tax experts can free up extra money to invest in creating the next innovation for your business…