R&D Tax Credits Guide
Our comprehensive R&D Tax Credits guide outlines what research and development tax credits are, how R&D tax relief can benefit your business, if you're eligible and how to make an R&D claim.
What are R&D Tax Credits?
R&D Tax Credits or R&D Tax relief is a government incentive to encourage innovation in UK registered companies. Whether your profit or loss making.
If you’ve spent time and money advancing the field of science or technology, you may qualify for R&D Tax relief. This incentive is rewarded either as a cash injection that you can reinvest back into your business or as a corporate tax reduction.
You have two years after the end of the accounting period in which you conducted the R&D to submit your claim. So, there is always time to audit your costs and discover if you’re eligible.
Innovate
Spend money on R&D
Reinvest
Reclaim costs & reinvest into your business
Claim
File an R&D Tax Credit claim
What are the benefits of claiming?
Whether you’re a startup or an enterprise sized business, thousands of UK companies are using R&D Tax Credits to:
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Increase cashflow to fuel growth
Get ahead of competitors by spending more on innovation
Reduce tax liabilities and save costs
Types of R&D Tax Credit
The R&D scheme is changing.
How you claim is dependent on your accounting period date and size of your business.
For any claims beginning before 1st April 2024:
SME Tax Relief for companies that have:
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less than 500 staff
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a turnover of under €100 million or a balance sheet total under €86 million
R&D Expenditure Credit or RDEC for larger companies or companies with state aid grant funding.
For any claims beginning after 1st April 2024:
Merged scheme for any sized company undertaking qualifying R&D.
SME Intensive scheme for companies that have:
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less than 500 staff
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a turnover of under €100 million or a balance sheet total under €86 million
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made a trading loss before relief is calculated
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spent at least 30% of your total revenue amount on R&D
How much can I claim?
You could receive as much as 33.4% of your Qualifying R&D Expenditure back from HMRC. Put simply, if you’ve spent £100,000 on R&D qualifying costs, you could get £33,400 back in cash.
There are three main factors that determine exactly how much you can claim:
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Company size
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Whether your loss or profit making
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Your accounting period year end
Let our experts guide you on what you’re eligible for by booking a call here.
Or use this diagram to work out what you could be eligible to claim:
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Current Scheme
For accounting periods on or after 01.04.24
Previous Scheme
For accounting periods before 01.04.24
*The difference in rates will vary depending on the level of taxable profits a company has and the corporation tax rate applied to those profits.
** SME companies whose qualifying R&D expenditure constitutes at least 40% (from April 2023) or 30% (from April 2024) of total expenditure.
What counts as R&D?
If you’re creating new products or services or trying to improve existing ones through building new knowledge, you might have qualifying R&D expenditure. HMRC defines R&D for tax purposes as projects that are seeking scientific or technological advancement. It doesn’t apply to work in the arts or humanities and other routine activities.
The guidelines are vague and change frequently, so we recommend speaking with an expert to be sure. Our Financial and Technical experts are well versed in how to uncover and explain qualifying R&D in line with HMRCs requirements.
What costs can I claim for?
Any costs that were incurred throughout the R&D project that falls into the following categories:
Staff costs
Like: permanent or agency staff wages and bonuses
Consumables
Covering: consumable or transformable items. This also includes water, fuel and power of any kind, but does not include rents or rates.
Subcontractors/
Externally Provided Workers
Note: only if based in the UK
Software
Computer software involved in the R&D claim. For accounting periods starting after 1 April 2023, you are now allowed to included software costs relating to data licenses, and cloud computing services.
Am I eligible to claim R&D Tax Credits?
To be eligible for R&D Tax Credits you must meet the following minimum requirements: ​
Be a UK Limited or PLC company
Have carried out qualifying Research & Development projects
Have spent money on these R&D projects
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The amount of expenditure your company can reclaim through R&D Tax Credits depends on several factors, such as whether your business is profit or loss-making, and whether you've received notified state aid. Review how much you could claim here.
How do I file a claim?
To ensure that no mistakes are made when selecting and presenting your qualifying expenditure to HMRC, we recommend working with a specialist R&D Tax Credits consultant.
Before you claim
You may need to notify HMRC of your intention to make a claim which must be done up to 6 months before submitting your claim. To avoid delaying your access to funds, speak to an expert about whether you have to notify HMRC.
Our Simplified Claims Process:
1 Eligibility call with an R&D Tax Credits Specialist
We’ll start by understanding your business and your R&D projects. You’ll get advice right away on qualifying expenditure.
2 Financial and Technical Deep Dive
Once we obtain the sufficient financial and technical information over a call, your dedicated Financial Consultant performs an in-depth analysis to ensure that no eligible cost is left out of your R&D claim.
3 Report Writing
We'll produce a comprehensive technical and financial report, detailing all of your qualifying expenditure and reasons why the costs are eligible.
Our CTA, ACA and ATT qualified experts are well-versed in producing successful R&D claims that adhere to HMRC's complex guidelines.
4 Submitting to HMRC
Our team can submit to HMRC on your behalf. We work directly with your Accountants or internal teams to prepare all of the required documents for submission.
We’ll monitor your claim and keep you updated on progress.
5 Receive R&D Tax Credit
Customers typically receive R&D Tax relief from HMRC in 4-6 weeks.