R&D Tax Credits
R&D Tax Credits
At Haggards Crowther, we can ensure you make the most out of your R&D claim, and support you throughout the process.
If you are a UK business that is involved in research and development (R&D) activities, you may be eligible for a generous tax relief scheme that can help you fund your projects and reduce your tax bill.
What is R&D Tax Credit?
R&D tax credit is a government incentive that rewards businesses for investing in innovation. It allows you to claim back a percentage of your R&D costs as a reduction in your corporation tax or as a cash payment if you are loss-making.
There are two types of R&D tax credit: the Small and Medium-sized Enterprise (SME) scheme and the Research and Development Expenditure Credit (RDEC) scheme.
The SME scheme is more generous and applies to businesses that have less than 500 employees, an annual turnover of less than €100 million, and a balance sheet total of less than €86 million.
The RDEC scheme is for larger businesses that do not qualify for the SME scheme or subcontract their R&D work to other entities.
The amount of R&D tax credit you can claim depends on the type of scheme, the amount of eligible R&D expenditure, and your taxable profits or losses.
For the SME scheme, you can claim up to 33% of your R&D costs if you are loss-making, or up to 25% if you are profitable. For the RDEC scheme, you can claim up to 13% of your R&D costs regardless of your profitability.
How Does R&D Tax Credit Work?
To claim R&D tax credit, you need to demonstrate that your project meets the definition of R&D for tax purposes. This means that your project must:
- Seek to achieve an advance in science or technology
- Involve the resolution of scientific or technological uncertainties
- Not be readily deducible by a competent professional in the field
- Your project can be in any sector or industry, and it does not have to be successful to qualify. However, it must relate to your trade or an extension of it.
You also need to identify and calculate your eligible R&D expenditure. This includes costs such as staff wages, materials, utilities, software, subcontractors, and externally provided workers.
You can only claim for costs that are directly attributable to the R&D activities and that are incurred in the accounting period for which you are claiming.
To claim R&D tax credit, you need to complete a CT600 form and include an R&D supplementary page (CT600L for the SME scheme or CT600H for the RDEC scheme).
You also need to provide a technical report that explains the nature and objectives of your project, the scientific or technological uncertainties involved, how you tried to overcome them, and the results and outcomes of your work. You should also include details of your eligible R&D expenditure and how you calculated it.
You can submit your claim up to two years after the end of the accounting period in which the R&D costs were incurred. You can expect to receive your tax relief or cash payment within four to six weeks after submitting your claim.
How Can We Help You?
Claiming R&D tax credit can be a complex and time-consuming process that requires specialist knowledge and expertise. That’s why we offer a comprehensive service that can help you maximise your R&D claim and minimise your hassle.
At Haggards Crowther, we have a team of qualified accountants and technical experts who can help you identify and document your eligible projects and costs, prepare and submit your claim, and deal with any queries from HMRC.
If you are interested in claiming R&D tax credits for your innovative projects, please contact Haggards Crowther today for a free consultation. We would love to hear from you and help you grow your business.