R&D tax credits explained

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R&D Tax credits explained

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What are R&D tax credits?

Research and Development (R&D) tax credits are a UK government tax relief that rewards companies of all sizes and sectors who invest in innovation. R&D tax relief can form an essential part of business growth, given in the form of a direct cash payment from HMRC or corporate tax reduction.

Who can claim R&D tax credits?

The governing legislation is purposefully broad in order to capture innovation across all sectors, from construction to food, to energy to insurance – the scope is huge. Your projects needn’t have been ultimately successful or commercially realised, and you can also claim for work undertaken on behalf of a client as well as your own projects.

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You can claim if

Developing new in-house machinery to improve production line efficiency.

Creating new software portals to aid a sales team in the field

Running advanced data analytics using cutting-edge computing

Key facts about R&D tax relief

SMEs can claim up to 27p for every £1 spent on qualifying R&D expenditure, or up to 16p for every £1 spent for large companies

R&D can take place in businesses of any size or sector and the scheme is open to all UK limited companies

You could be eligible to claim by creating or improving products, processes, services, devices or knowledge

This cash boost could be used to reward staff, grow your team or fuel your next project

Read our R&D FAQs

Our client-first approach

Since the beginning, our focus has been on providing businesses with the best possible R&D claims service. Our clients come from a wide variety of sectors, and they love us for what we do.

Our team

Our team comprises engineers, science and technology PhDs, and sector specialists who will prepare the reports and claim documentation on your behalf

Expert advice

We take the time to get to know your business; this means we’re often able to find more qualifying expenditure than other advisers

RDCF

We sit on the R&D Communication Forum (RDCF) and have a large amount of interaction with HMRC on the various nuances of the legislation

Our processes

We have rigorous in-house quality assurance processes to ensure your claim holds up under HMRC scrutiny

Our fee

Our fee is success-based only and includes support through any questions or an enquiry from HMRC

Not sure if what you do counts as R&D? You’re not alone

R&D doesn’t mean reinventing the wheel: it’s solving problems in a new way or having to overcome a challenge that doesn’t have a straightforward solution. Examples of R&D might include creating new products, processes, devices or services, or modifying existing products, processes, devices or services. What’s more, you can even claim if your project was unsuccessful.

Read our R&D by sector guides

Over 75% of the clients we work with didn’t realise they qualified for R&D tax relief before speaking to us

Qualifying costs for R&D activity

Staff costs

SMEs can claim up to 27p for every £1 spent on qualifying R&D expenditure, or up to 16p for every £1 spent for large companies

Computer software

Software partly or wholly used to facilitate R&D activities

Subcontractors and freelancers

Cost of hiring external or contracted staff to work on R&D projects

Consumables such as water, fuel and power

Items that are consumed during R&D activities, including materials and prototypes

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Find out if you qualify for R&D funding

Discover which UK government incentives your business could qualify for with our quick and easy self-assessment tool. In just a few minutes, you’ll receive a tailored report outlining the funding opportunities available to support your innovation and growth.

R&D tax credits, grants, Patent Box and R&D allowances are all schemes are designed to help ambitious businesses like yours thrive. Don’t leave potential funding untapped—it could be the key to fuelling your next big idea.

1. It takes less than 5 minutes

2. Answer a few easy questions about your business

3. Get a clear idea of your eligibility for R&D incentives

Take our free eligibility test

R&D tax credits – FAQs

We understand that R&D legislation can be complex and overwhelming, so we’ve addressed some of the most common questions in a straightforward and easy-to-understand format below. If you have any additional questions or would like more information, feel free to reach out to us — we’d be happy to assist.

What is the Deadline to Make a Claim for R&D Tax Credits?

The deadline to claim R&D tax credits is two years from the end of the accounting period in which the R&D expenditure was incurred. For example, if your accounting period ends on 31 December 2022, you have until 31 December 2024 to submit a claim for that period.

What Happens if You Make a Late Claim for R&D Tax Relief?

If you make a late claim for R&D tax relief, you can still claim, but you’ll only be able to claim for the two accounting periods preceding the current one. For example, if you’re claiming in 2024, you can only claim for 2022 and 2023, but not 2021.

Will HMRC Make an Enquiry into the Company’s Tax Affairs if I Make an R&D Tax Credits Claim?

Making an R&D tax credits claim doesn’t necessarily trigger an HMRC enquiry. However, HMRC may review your claim to ensure it meets the R&D tax relief criteria. If your claim is accurate and well-documented, the risk of an enquiry is low. Keep records tidy and be prepared to justify your claim.

How Long Does It Take for HMRC to Process an R&D Tax Credit Claim?

Typically, HMRC processes R&D tax credit claims within 28 days, but this can vary. If your claim is straightforward and well-documented, you can expect a quicker turnaround. In some cases, HMRC may request additional information, which can delay the process. Keep records handy to avoid any unnecessary hold-ups.

Can You Work with My Accountants or Auditors?

Absolutely! We work seamlessly with accountants and auditors to ensure a smooth R&D tax credit claim process. We’ll collaborate with your advisors to gather the necessary information, ensure compliance, and maximise your claim. Our goal is to make the process as efficient and stress-free as possible for you and your team.

What Happens if I Owe Other Taxes?

Don’t worry, owing other taxes won’t impact your R&D tax credit claim. HMRC will process your claim separately from other tax liabilities. If you’re due a credit, you’ll still receive it, even if you owe other taxes. We’ll guide you through the process to ensure a smooth outcome.