Research & Development (R&D) Tax Relief is a government-backed corporation tax incentive scheme, aimed at stimulating innovation and development in UK industries. Investing in innovation is good not only for every business, but also for the UK economy as a whole. This regime plays a big part in the UK remaining competitive in the EU and overseas markets, in particular in the light of Brexit.
To qualify, the company must be carrying out research and development work in the field of science or technology, as per the definition of R&D for tax purposes. The net benefit of R&D tax relief ranges from 9% to 33% of eligible expenditure, depending on the size of the company and whether a profit or loss has been made.
The SME Scheme
From 1 April 2015, the additional deduction a company can receive was increased to 130% on top of the qualifying R&D costs. Loss-making companies can in certain circumstances surrender their losses in return for a payable tax credit.
Research and Development Expenditure Credit Scheme
From 1 April 2015, Research and Development Expenditure Credit (RDEC) was available at 11% of qualifying R&D expenditure. The RDEC rate increased to 12% of qualifying expenditure incurred on or after 1 January 2018. For loss making companies, the tax credit is fully payable (subject to certain restrictions).
If your engineers or technologists encounter failures or technical challenges and issues in the course of their work, or the completion of a project takes longer than projected, this could indicate the presence of qualifying activities.
If your technical team spent time improving processes or developing solutions to technical problems, performing feasibility assessment or trying to find solutions through an iterative process of trial and error, this is very likely to qualify.
Sectors we look after
Successfully claiming R&D tax relief can provide significant cash flow benefits, either by reducing a company’s tax liability or claiming an additional tax repayment (R&D tax credits). R&D claims are most commonly made by businesses in the following sectors: engineering, pharmaceutical, healthcare, software development and IT, energy-saving, biotechnology, architecture, manufacturing, design engineering, construction, food, beverages, animal nutrition, breweries, aerospace engineering, automotive, medical, travel, tourism, packaging and so on.
Our experts and services
We have national R&D specialists who help businesses all over the UK to identify qualifying expenditure and help to maximise their claims. Our team is made up of qualified and experienced financial advisors, accountants and tax specialists with scientific and engineering qualifications who can provide expert advice at each required area of the claim. We will assist you in the identification of R&D activities within each specific field, through the interviewing of technical personnel, identifying qualifying activities, establishing their boundaries, preparing reports, gathering of financial costs, calculating the benefit, filing claims and managing communication with HMRC.
Depending on what suits your business, we can provide a range of personalised services, such as:
- Managing back to back claims
- Feasibility studies
- Training courses on R&D tax incentives
- Assessment of previous claims
- Review of current processes
- Advisory on qualifying activities and costs
- Defence of existing claims taken into enquiry by HMRC
If you have any questions or if you think that you may be able to make an R&D Tax Relief claim, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Research and Development Tax team.