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:
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.
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