Are You Eligible To Claim R&D Tax Credit?
Research and Development tax credits.
Since 2002, this government incentive has been available to UK companies that carry out research and development – rewarding them for investing in innovation and overcoming technical or scientific challenges.
The scope for research and development exists in almost every single sector today. It can be anything from developing new software to improving a system’s efficiency, or bringing a brand new product to the marketplace.
But the question is – can anyone claim R&D tax credits, or is there a criterion you need to meet?
Here EVE Accountants take a closer look at R&D tax credits and making a claim.
What are R&D tax credits?
Research and Development (R&D) tax credit is a corporation tax relief that can reduce your company’s tax bill, or provide a cash rebate in some cases.
This type of tax relief provides businesses with a source of income to invest in accelerating and expanding their research and development work, including hiring new staff.
If your company has spent money on developing a product or service, or enhancing existing ones, R&D tax credit allows you to claim back up to 33% of all your R&D costs.
As a form of innovation funding, it can give successful claimants a welcome boost and allow their businesses to grow, but the government and economy can also benefit from this increased productivity.
How does R&D tax credit work?
R&D tax credits are calculated based on your R&D spend. The way you claim tax relief depends on the size of your company.
Generally, small and medium-sized enterprises (SMEs) can claim up to 33p for every £1 spent on qualifying R&D activities, whilst large companies can claim up to 11p for every £1 spent.
The tax credit claim will be made on your corporation tax return, and HMRC requests that a technical report explaining why a project qualifies for R&D accompanies the tax return.
If it’s your first time making a claim, you should be able to claim tax relief for your last two completed accounting periods!
Is my business eligible for R&D tax credits?
Many businesses fail to make a successful claim, usually because they are unaware of the scheme or have been ill-advised.
To benefit from R&D tax incentives – the UK’s most generous corporation tax relief – you must:
- Be a limited company in the UK and liable for corporation tax
- Have carried out qualifying research and development projects (relating to your company’s trade)
- Taken a risk by improving or developing a product, process, or service
- Have spent money on R&D projects
Let EVE Accountants help
At EVE, we are passionate about helping innovative companies to realise the opportunities afforded by R&D tax relief so they can grow to their full potential.
Our accountants in Bolton have a fantastic track record of making successful claims and can make the process of claiming R&D tax credits a whole lot easier for your business.
The first step is to arrange a free consultation with our tax specialists. During this initial appointment, we will get to know you and your business, offer advice that is 100% relevant to your industry, and talk you through the potential for making a successful R&D tax credit claim.
Our experts will also share their knowledge and experience to ensure you capture all costs associated with R&D qualifying projects, maximising the benefit to your business.