Sage LakhaniHead of Consulting
Having started her career with PwC London, Sage has previously held positions at two boutique tax consultancies working with entrepreneurs and growing businesses. She is also a qualified Chartered Tax Adviser.
Research and Development (R&D) tax credits can be claimed in relation to certain categories of revenue expenditure within your financial year. The government’s R&D incentives offer a vital cash-boost to innovative business that have incurred costs from their risk-taking innovation. Many companies who are new to the incentives fear they’ve missed an opportunity to claim on previous projects and expenditure and prior years. But this doesn’t have to be the case.
How far back can you claim R&D tax credits?
R&D tax credits allow you to claim retrospectively. But there is a deadline: the deadline for submitting a retrospective claim for R&D tax credits is two years from the end of the accounting period in which the R&D work took place.
R&D tax credits are a form of Corporation Tax relief, so the time limit for claiming will align with your financial year-end: you have 24 months from your financial year-end to amend your Corporation Tax returns.
Example of R&D tax credit deadlines
If your company had a financial year-end of 30th September, and the date was 30th September 2023, you would have been able to submit retrospective R&D tax relief claims for research projects carried out within the following accounting periods:
1st October 2020 – 30th September 2021
1st October 2021 – 30th September 2022
From 1st October 2023 onwards, the last eligible accounting period that a claim could be submitted for would be:
1st October 2021 – 30th September 2022
If you have carried out eligible R&D in subsequent periods, you will be able to make a new claim each year. You should prepare and review each claim with the same level of diligence each time you make a claim.
What types of R&D expenditure can you claim for?
If your R&D project meets the eligibility criteria above, you can subsequently claim for the following expenses generated throughout:
- Staffing costs of full-time employees, spanning salaries, employer National Insurance contributions (NICs) and pension contributions
- The cost of hiring freelancers and subcontractors to help undertake the project
- The outlay for some types of industry software
- The cost of consumables and materials ‘used up or transformed by the R&D process’ e.g. power, heat and light
Large and small companies have two years from the end of their accounting period to file a claim for R&D tax credits spanning all qualifying expenditure outlaid throughout
