R&D Tax credit support
The R & D Tax Relief Scheme was introduced in 2000 to support and reward companies undertaking the costly and sometimes onerous business of research and development. I aim to give you an idea of your R&D tax eligibility, and how Access2Funding can help you do this in a straightforward, consistent and time-efficient way.
Scheme Eligibility
SMEs can claim R&D tax credits through the SME scheme, which is open to solvent registered companies with fewer than 500 staff, and a turnover of under €100m or a balance sheet total under €86m. As long as they’re doing eligible R&D
As a general rule SMEs can claim up to 33% of eligible expenditure, and Large Companies can claim 12% of eligible expenditure.
This can be the hardest part of claiming R&D tax credits, and depends on several HMRC definitions. Basically, you need to show that your projects:
- Aimed to make an advance in an area of science and technology
- Involved technological uncertainty
- Made efforts to overcome this uncertainty
- couldn’t have been easily worked out by a professional in the field
These are HMRC’s terms, and have fairly straightforward definitions:
Technical or Scientific Advance: a project outcome that creates an advance in an overall field of science or technology, not just for your business or sector.
Technological Uncertainty: something that isn’t known to be scientifically or technologically feasible at the beginning of the project – basically, if you are a technical specialist in your field and are not sure that you can achieve the scientific or technological aims of the project, you’ve got technical uncertainty!
What is eligible expenditure?
These fall into five main categories:
Staff costs, including pensions and bonuses
Subcontracted costs
Raw material costs
Utility costs
Software costs
The main things to remember when collating costs is that the total figures must line up with your P&L account, and HMRC expects apportionments to R&D projects to be fair and reasonable.
Company A employed four people to work on their eligible R&D projects. Each of these people was paid a salary of £25,000, and spent around 40% of their time carrying out project-related activities. The company also spent £100,000 on raw materials during the claim year, of which 25% was consumed by R&D activities. The company also paid for a licence for specialist software for use in the R&D projects, costing £3000 in the claim year.
So, what would the total eligible cost be?
Cost Total for the claim year Apportionment to R&D Eligible cost
Staff £100,000 40% £40,000
Raw materials £100,000 25% £25,000
Software £3000 100% £3000
Total eligible expenditure £68,000
How and when do you claim R&D tax credits?
The R&D Tax credit scheme enables you to reduce your corporation tax liability, get a refund of tax that has already been paid, or, in the case of loss-making companies, receive a tax credit.
The timelines for claiming R&D tax credits are strict – you must submit any claim within two years of the end of the accounting period in which the work took place. HMRC will not process any claims submitted after this deadline, and you could miss out on huge tax benefits!
Book a Free Research and Development Assessment - https://calendly.com/s-watkins-access2funding-randdtaxcredits
Scheme Eligibility
SMEs can claim R&D tax credits through the SME scheme, which is open to solvent registered companies with fewer than 500 staff, and a turnover of under €100m or a balance sheet total under €86m. As long as they’re doing eligible R&D
As a general rule SMEs can claim up to 33% of eligible expenditure, and Large Companies can claim 12% of eligible expenditure.
This can be the hardest part of claiming R&D tax credits, and depends on several HMRC definitions. Basically, you need to show that your projects:
- Aimed to make an advance in an area of science and technology
- Involved technological uncertainty
- Made efforts to overcome this uncertainty
- couldn’t have been easily worked out by a professional in the field
These are HMRC’s terms, and have fairly straightforward definitions:
Technical or Scientific Advance: a project outcome that creates an advance in an overall field of science or technology, not just for your business or sector.
Technological Uncertainty: something that isn’t known to be scientifically or technologically feasible at the beginning of the project – basically, if you are a technical specialist in your field and are not sure that you can achieve the scientific or technological aims of the project, you’ve got technical uncertainty!
What is eligible expenditure?
These fall into five main categories:
Staff costs, including pensions and bonuses
Subcontracted costs
Raw material costs
Utility costs
Software costs
The main things to remember when collating costs is that the total figures must line up with your P&L account, and HMRC expects apportionments to R&D projects to be fair and reasonable.
Company A employed four people to work on their eligible R&D projects. Each of these people was paid a salary of £25,000, and spent around 40% of their time carrying out project-related activities. The company also spent £100,000 on raw materials during the claim year, of which 25% was consumed by R&D activities. The company also paid for a licence for specialist software for use in the R&D projects, costing £3000 in the claim year.
So, what would the total eligible cost be?
Cost Total for the claim year Apportionment to R&D Eligible cost
Staff £100,000 40% £40,000
Raw materials £100,000 25% £25,000
Software £3000 100% £3000
Total eligible expenditure £68,000
How and when do you claim R&D tax credits?
The R&D Tax credit scheme enables you to reduce your corporation tax liability, get a refund of tax that has already been paid, or, in the case of loss-making companies, receive a tax credit.
The timelines for claiming R&D tax credits are strict – you must submit any claim within two years of the end of the accounting period in which the work took place. HMRC will not process any claims submitted after this deadline, and you could miss out on huge tax benefits!
Book a Free Research and Development Assessment - https://calendly.com/s-watkins-access2funding-randdtaxcredits