Understanding R&D Credit

We receive a lot of questions regarding R&D Tax claims, it may seem like a complex process. So we’ve put together a list of R&D Credit FAQs to solve your queries.

R&D tax relief is an incentive for businesses seeking advancement in science and technology. R&D tax scheme was initiated by the government in 2000 to motivate and appreciate the investment in innovation. It allows businesses to claim tax break or reclaim qualifying R&D costs.

If subcontractors succeed to fulfill prerequisites concerning contract details, risks involved, and uncertainty of the project, it allows you to reclaim 65% of the amount paid to the contractors. If you belong to the same group of contractors in that case, you cannot claim the amount paid.

If you are a UK-based company and investing to seek advancement in technology and science, then you might qualify for the R&D credit. Even if your project fails you are still eligible for the claim.

R&D tax relief is dependent on the category you fall in. If you are a small company with less than 500 employees, a turnover of £100 million, or a balance sheet under £86 million then you are an SME and eligible to claim up to 33% of qualifying cost. If you are a large company then you can reclaim up to 13% of R&D costs via the RDEC scheme.

Yes, the R&D credit is the UK government’s incentive for innovative projects and the SME scheme falls under the category of ‘Notifiable State Aid’.

The worth of R&D credit depends on your project and the category you fall in. SME’s can reclaim 33% of their qualifying R and D expenditure, whereas large companies can claim around 13% of their R&D cost through the RDEC scheme.

No, charities and sole traders are not eligible for R&D tax relief claims. To claim for R&D credit one must be liable to Corporation Tax.

There is the possibility that if you have received grants it may affect your R&D claim via RDEC and if grants you received fall under ‘State Aid’ then it may affect SME claim.

If a project fulfills the prerequisites of R&D credit while seeking advancement in science and technology and aims to overcome uncertainties, then it qualifies for an R&D claim.

You can make R&D claim for the last two accounting periods of the company.

That depends on whether a company is profitable or loss-making. R&D credit are paid either in cash, a CT rebate or as an enhanced expenditure that the business may utilize for profits in the future.

HMRC has not a limited requirement of the documents, as it varies with businesses. HMRC requires a report detailing your project and how it fulfills the prerequisites of the claim to convince HMRC of your eligibility. You are also required to calculate enhanced expenditures to enter in CT600 form. You are required to fill CT600 form and file it to HMRC.

Our minimum fee is £2’000 however we would never encourage you to make a claim that isn’t beneficial for you. Considering your expenditure and project details our R&D tax specialists will advise you accordingly. We work on a contingent basis; your benefit is our benefit.

We aim to prepare, review, complete, and submit your claim within 2 weeks. Our R&D tax specialists meet all the deadlines however, this process requires your little input and approval before submission, therefore submission of a R&D claim is also dependent on your availability to discuss the projects with our R&D tax specialist.


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