We’re R&D tax credit specialists. We’ll guide you through the R&D claim process.
Research and Development Tax Credits. You can claim tax relief on your R&D costs.
Research and Development (R&D) tax relief is a valuable tax relief that can significantly reduce your company’s corporation tax payment, and even get you some cash back.
What are Research and Development Tax Credits?
Research and Development tax relief is an initiative by the UK Government to encourage and reward companies for innovation through a cash reward for developing new technologies to substantially improve products, processes, devices, materials and/or services.
Companies who are successful in claiming Research and Development tax relief receive a corporation tax refund after the end of the financial year. Last year more than 39,000 companies throughout the UK used Research and Development Tax Credits to claim back almost £3.5bn.
Research and Development Tax Credits offer an essential source of funding to encourage businesses to innovate. Every £1 spent of research and development is shown to return £7 of net economic benefit to the UK and it’s hoped that the focus put onto R&D by the Government will put UK businesses at the forefront of worldwide innovation.
Callan are Glasgow-based accountants and can help you with your R&D Tax Credit claims.
What is Research and Development Tax Relief Worth?
If your company is carrying out qualifying research and development you can claim Research and Development Tax Credits under the SME R&D scheme or the Large Company R&D scheme.
The SME Research and Development tax credits allow you to reclaim up to 33.35% of your research and development costs even if the project you were working on did not succeed.
Companies with under 500 employees or a turnover of under €100m (or has assets of less than €86m) can claim back up to 33% of the money they’ve put into R&D (if it qualifies).
Does my business qualify?
The Research and Development tax credits are available to all companies and we have prepared claims not just for traditional manufacturing and engineering companies, but also for high technology companies in software, aerospace, automotive and energy.
However, don’t think you are excluded from making a claim if your business is engaged in a different sector. If you have a problem in your business and use some element of science or technology to try to fix it, then you might have the potential for a claim.
Costs incurred in undertaking eligible development work can qualify for enhanced tax relief include:
- Staffing costs and agency workers – for time spent directly and indirectly on R&D
- Consumable items – including power and water costs, software used for R&D
- Certain payments to sub-contractors
- Prototype costs
A claim for R&D tax relief and credits must be made within two years of the expenditure being incurred, depending on the date of the company’s accounting year-end.
To qualify for R&D tax relief your company must meet the correct criteria of what is considered to be Research and Development. Spending money developing a new product doesn’t necessarily count and qualifying R&D. Your research and development work must be seen as being commercially innovative, seeking an advance in science or technology. You must also be seen to be intending to use the results of the R&D in your own business and you must not be funding your research by using any government subsidies.
Companies working in almost any industry can quality for R&D Tax Credits. If you are a manufacturing company trying to develop new ways to increase efficiency or reduce emissions you may qualify. Technology companies experimenting with new or untested platforms, technologies or programming methods to overcome problems that haven’t been solved before may also qualify. Science companies attempting to find new solutions in fields such as medicine, agriculture and bioengineering, or engineering companies attempting to find new ways to improve manufacturing or construction processes may also qualify.
The key is that your research and development must be trying to find new solutions that meaningfully improve on current thinking or practices. Qualifying research and development is seen to have taken place whether the project ended successfully or failed, as long as it was attempting to break new ground in the area in question.
All companies, large and small, can claim if they undertake qualifying work – even if they do not pay corporation tax because they are unprofitable. The development does not need to be successful – abortive or failed projects can be included also be included in the claim.
We can look at the research and development your company has been undertaking or is planning to undertake, ensuring that you are correctly informed of the likelihood of a successful R&D Tax Credit claim.
How do I make a claim?
Our R&D tax specialists have an excellent track record in making successful Research and Development tax relief claims for companies and have generated significant tax savings for our clients.
We aim to make the process as seamless as possible and due to our wealth of experience, we can make the process quick and efficient. We look to understand our client’s business and can use this understanding to generate projects with a potential claim that others will miss.
We can help identify qualifying R&D projects within your business that you may not have been aware would qualify for an R&D Tax Credit. Working with you we can help you set up effective internal processes to help you capture important R&D data. We can properly prepare your Research and Development claim and submit it to HMRC on your behalf.
If you would like to discuss further how we can help you with Research and Development tax relief, or if you have any general accountancy questions, contact us by clicking here or calling the team on 0141 204 0930.