Sam Stephens
Director
Businesses all over the UK are missing out on the benefits that claiming R&D Tax Credits could offer their company. Any business that performs research and development could be eligible to make a claim – so what are you waiting for?
Since 2000, HMRC have offered an incentive for innovative UK businesses to conduct research and development (R&D) to create new products, processes and services, by providing either a Corporation Tax reduction or cash repayment for a proportion of their R&D expenditure. HMRC currently offer this via two schemes:
SME Scheme – businesses are eligible for the SME R&D Tax Credits Scheme if they have less than 500 full-time employees and less than €100 million turnover.
RDEC Scheme – businesses are eligible for the RDEC R&D Tax Credits (Research & Development Expenditure Credit) Scheme – formally known as the large company scheme – if they have over 500 full-time employees and more than €100 million turnover.
The two schemes result in all UK-registered businesses that would usually pay Corporation Tax potentially being eligible to make a claim, as long as they’re undertaking R&D that seeks to achieve an advance in overall capability or knowledge.
Depending on the size and status of your business, the amount you can claim will differ:
SME Scheme:
RDEC Scheme:
The SME Scheme is notably more generous, but large businesses should not be discouraged.
Eligible expenditure for R&D Tax Credit claims falls under 4 categories:
There are slight differences between the SME and RDEC Scheme for what is considered an eligible cost in these categories and what proportion of the costs can be claimed. An R&D Tax Specialist will be able to discuss these with you in more detail when checking your eligibility.
Yes, receiving Grant Funding can affect your R&D Tax Credit claim. Due to State Aid Rules, grant funded projects need to be assessed on a case-by-case basis to determine whether a claim can be made; for example:
Under the RDEC Scheme, a SME company receiving a Notified State Aid Grant may be able to claim against the entire project costs for expenditure on items such as materials, consumables and staff.
If the grant is Non-Notified State Aid then a SME business may also be able to claim via the SME Scheme for the self-funded portion of the project costs.
Companies that have never made a R&D Tax claim before should check their eligibility as soon as possible. You have 2 years to make a retrospective claim, so every day that ticks by, means you’re ever closer to losing another year’s tax relief! Speak to your Accountant or an R&D Tax Specialist to discuss making a claim for previous years.
Many UK businesses have already looked into R&D Tax and may already be claiming – our only question to you is: “are you sure you’re receiving the maximum amount of benefit?” R&D Tax legislation is complicated and notoriously difficult to decipher. A R&D Tax Specialist will be able to help you work out whether you’re claiming everything you should be.
The simple answer is yes. Companies should begin by asking themselves 3 questions:
If your answer to all of those questions is yes, you should begin looking at building your R&D Tax Credit claim with an Accountant or R&D Tax Credit Specialist. Contact us here.
Like many R&D tax credit professionals and accountants, TBAT have conducted a number of compliance checks, supporting both our own claims and those of clients who sought assistance with claims prepared by others. In our latest article, we take you through how TBAT Innovation is managing these compliance checks.
On September 16, 2024, HMRC held the R&D Communication Forum (RDCF), where several updates were shared. In our latest article, we discuss updates regarding the Enhanced Research Intensive Scheme (ERIS), the Additional Information Form, initiatives for raising standards in the R&D market, the Mandatory Random Enquiry Programme, and HMRC operations.
Assists organisations in accessing research and development grant funding across a range of UK and EU schemes and industry sectors.
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