Research & Development Tax Incentives
Why make a claim
- For a profitable company: to reduce its corporation tax bill
- For a loss-making company: to claim cash from HMRC in the form of R&D tax credits or repayable research and developments expenditure credits
- To improve the company's cashflow
- To make the company's balance sheet look healthier
- To increase the company's reserves
What are R&D tax credits
Our experience is that many companies have not realised the full extent of the R&D tax credits available to them. Any UK company that is looking to develop new products or processes, or to improve its products or processes, may be entitled to claim this relief.
Our specialist Innovation Taxes team are experienced in helping companies to maximise their R&D tax credits.
We have helped all sizes of companies across a wide range of sectors, not just technology and research based companies.
What does my company have to do to claim R&D tax credits?
How much is an R&D tax credit claim worth to my company?
If your company is carrying on R&D you can claim R&D tax credits under either the SME R&D scheme, the Large company R&D scheme.
In certain circumstances where your company is a subcontractor, or has received a grant or subsidy to help with the R&D, it may be either wholly under the Large company R&D scheme (irrespective of the size of the company) or it may be partly under the SME R&D scheme and partly under the Large company R&D scheme.
Large company scheme
- Under the Large company scheme, companies claim a 13% (12% for pre April 2020 R&D spend) 'research and development expenditure tax credit' (RDEC).
- This is taxable, but is offset against a company's tax liability. This is equivalent to a £10.53 reduction in tax liability for every £100 of R&D spend (or £9.72 for R&D spend in the period 1 January 2018 to 30 April 2020).
- Where a company is loss-making, or has insufficient tax liability against which to offset the RDEC, a company can generally claim cash from HMRC at the same rate.
SME Scheme
- Under the SME scheme, R&D tax relief is an additional 130% tax deduction beyond the 100% normally available.
- This is equivalent to a £43.70 reduction in tax liability for every £100 of R&D spend.
- Loss making companies can cash-in R&D tax losses at up to £33.35 for every £100 of R&D spend.
Is my company carrying on R&D?
A project needs to meet two criterion to be eligible for R&D tax credits. Firstly, it has to seek to achieve an advance in knowledge or capabilities in the field of science or technology, and secondly the advance has to be through the resolution of technological uncertainties.
The main obstacle for many is understanding what R&D means and if your company is actually doing it.
You may qualify if you are:
Developing new or improved products or processes.
Examples:
- Manufacturing.
- Food and drink.
- Audio visual and sensory related technologies.
- Property, construction and engineering.
- Healthcare and biotechnologies.
- Renewables and environmental technologies.
Investing in technology, including the development of new or improved software when used:
- for sale or licensing
- as part of a product, process or device.
Examples:
- Development of apps, tools and platforms.
- Data analytics e.g. in the medical and financial sensory etc.
- Data security / e-learning.
Investing in software to make your business run more efficiently.
Examples:
Is my company eligible to claim R&D tax credits?
Click on your sector below to find out if you are able to claim using our simple questionnaire.
What costs are eligible for R&D cash tax credits?
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Employee costs, including gross salaries, NIC'ers and company pension costs and some reimbursed expenses. |
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Subcontractor costs and employee costs of other group companies helping with the R&D. |
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Materials, consumables and prototype costs. |
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Software costs. |
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Light, heat and rates. |
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Rent, rates and office overheads. |
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Stationery, printing, postage and telecommunications. |
Why choose Crowe?
By taking the time to get to know your business we can not only maximise your R&D tax credits, but this will also help us to spot other tax and business opportunities for you.
Whatever stage you are at in the intellectual property lifecycle, whether it be research, exploitation, growth, or planning for succession or exit, we are a multi-disciplined business with the expertise to help your business throughout its end-to-end journey.
How we help our clients
We can help you maximise the available benefits by:
- identifing R&D projects
- preparing and submitting your R&D claims to HMRC
- reviewing and replacing previously understated claims.
- helping set up internal procedures to capture R&D data.
- helping maximise the benefit from R&D tax losses.
Helping your business make the most of its assets by looking at tax incentives.
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