What are Research and Development tax credits & who can claim them?
Research and development is the use of innovation by businesses with the aim of creating new products and services or improving those that currently exist. For some companies, figuring all this out may seem like a bit of a headache, but research and development tax credits are more straightforward than you might think. Research and development tax credits is a corporation tax relief designed to reward companies in the UK for being innovative, giving many UK businesses a helping hand.
Research and development tax credits reward companies who look to develop new ideas and products, providing them with the opportunity to recoup 33p for every pound spent.
Who is eligible for research and development tax credits?
R&D tax credits are available to any sized company in any sector, as long as they are creating new products or services. This means whether you’re a small, medium or large business, you could be eligible for R&D tax credits.
HMRC’s eligibility criteria for R&D tax credits is somewhat broad. Put simply, the project must tick each of the following boxes:
- It investigated potential advancements in science or technology
- It had to overcome an element of uncertainty
- It couldn’t be easily solved by a professional in your industry
Note: Failed R&D projects are also eligible for tax relief. HMRC does not specify at any stage that the project has to be commercially successful. Furthermore, your business can claim for R&D projects carried out on behalf of a client, as well as your own tasks.
75% of our clients didn’t even know that R&D Tax credits existed before working with Kene Partners. By offsetting costs and profits derived from R&D projects, your business can benefit from significant tax savings.
What types of research and development expenditure can I claim for?
If your R&D project meets any of the eligibility criteria above, you can subsequently claim for the following expenses generated throughout:
- The cost of hiring freelancers and subcontractors to help undertake the project
- Staffing costs of full-time employees, spanning salaries, employer National Insurance contributions (NICs) and pension contributions
- 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
Research and development tax credits are available to businesses big and small
At Kene Partners, we work with a broad mix of companies from start-up enterprises and small and medium-sized businesses (SMEs) through to larger more complex companies to help them claim the R&D tax credits they are rightfully owed.
- Start-ups and SMEs
For businesses with less than 500 employees, generating less than €100 million turnover or having less than €86 million in gross assets, our specialist R&D incentive advisers can help you claim back up to 33p for every pound spent on R&D through the SME R&D Relief scheme. We can work with you to calculate your overall tax relief so that you can focus on doing what you do best – running your business.
- Large companies
Companies with more than 500 employees, generating more than €100 million turnover and boasting over €86 million in gross assets can claim back 11p in every pound of qualifying R&D expenditure through the R&D Expenditure Credit (RDEC). We can help optimise new and previous R&D tax claims to obtain higher rebates and automate ongoing annual claims to minimise your company’s overall input in the process.