What are R&D Tax Credits?
The R&D Tax Credits Scheme is a government incentive designed to reward businesses for solving problems and sharing their solutions so everyone benefits. Whenever you spend money on a project that qualifies, you can get a cash reward or a reduction in the amount of Corporation Tax you're paying.
Companies that qualify for the government's R&D tax credit scheme could see a return of up to 33% of your qualifying costs. Here’s what you need to know:
- The average claim for SMEs is £54,000
- It encourages and rewards innovation in business
- You could get up to 33% of qualifying costs back
- Unlike the other tax reliefs, the government actively wants you to claim it
- When your claim is approved your business can choose how you are awarded it – a refund or future tax relief
Depending on your circumstances, your R&D tax credit can take the form of a reduction in your overall Corporation Tax bill, a repayment or an R&D tax credit cash refund if your business made a loss, whatever is more beneficial to your business. RIFT will also help you understand whether your business should claim under the SME scheme or the RDEC scheme, to keep you on the good side of HMRC.
Don't worry if your solution didn't work out, even failed or abortive projects can be included in a claim.
Government R&D Tax Credit Schemes
This is an important question that we believe a lot more businesses need to be asking. Answer a few simple questions to get a quick indication of whether your business is eligible for R&D Tax Credits.
Is your business:
- A registered UK limited company?
- Tackling technical challenges through the process of trial and error, which is stretching the expertise of your staff and current industry knowledge?
- Paying out of its own pocket to overcome these technical challenges, either through employed staff or by using subcontracted workers?
If you can answer yes to those questions, even if your attempts at a solution were unsuccessful, you could qualify for R&D tax credits.
Check if your business is eligibleSectors eligible for R&D tax credits
We've helped a wide variety of sectors across the UK recognise the value of R&D tax credits. Any business in any sector can be eligible to claim, providing they are overcoming technical challenges at their own expense. Discover the sectors we've worked with below.
Whatever sector you're in, if you're working to improve your product, process or service through technical changes or developing an idea which isn’t available elsewhere then these are all indicators that your project qualifies as R&D.
Think of of it this way: if competitors would take the credit for your innovation if they could then it's worth looking into making a claim.
What costs qualify for R&D tax credits
Even businesses who know about the R&D scheme aren't fully aware of all the R&D qualifying costs which can be claimed on. With the right help and an expert eye for detail, the R&D Tax Relief scheme is the single biggest boost your business can get. Read our R&D tax credits explained page to discover the facts.
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1
Employee costs
All people working on the projects
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2
Subcontracted R&D expenditure
Costs of subcontractors for R&D activities
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3
Software
Software needed for the project
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4
Materials
The actual, physical materials your project uses
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5
Utilities
The water, power & fuel used by your project.
SME R&D Tax Credits
As the name suggests this scheme is for SMEs, allowing them to claim up to 230% of their qualifying R&D costs. Here's what it takes to qualify:
- Less than 500 employees
- Under 100m Euro turnover
- Eligible to pay corporation tax
- Investing in staff, software, consumable items, prototypes and materials at your own expense
R&D Expenditure Credit (RDEC) Scheme
The RDEC scheme allows for businesses who fall outside of the SME scheme to claim R&D tax relief. For the RDEC scheme, you'd likely have:
- A turnover greater than 100m Euros, or a balance sheet greater that 86m Euros.
- More than 500 employees
The RDEC scheme allows companies to claim back 13% of their qualifying expenditure, but some SMEs may be required to claim under it too. Find out more here about the different types of R&D tax credits.
The process of making an R&D claim can be a daunting task, but our knowledge and expertise will not only help you maximise your return, but ensure it's a hassle free process too. The steps to complete your R&D claim are:
- We assess whether you qualify to claim and which R&D scheme you are suited to claim under.
- Together we gather the relevant information detailing your R&D journey and associated costs involved.
- We then compile a technical R&D report in HMRCs recognised format, which will be sent to you for your approval on completion.
- Your claim is the submitted with your company account via your accountant to HMRC.
- HMRC review and approve the claim, before releasing your tax credits.
Our technical teams specialise in hunting down all your qualifying R&D costs and turning them into a serious financial boost for your business.
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