Associated Worldwide with Morison KSi
R&D tax relief is a tax incentive from the UK Government designed to encourage companies to invest in R&D. The scheme has been around since 2000 and last year over 25,000 UK companies claimed almost £2.9bn in tax relief.
R&D tax incentives are available to both Small and Medium Sized Entities (SME’s) and Large Companies.
WHAT ACTIVITIES QUALIFY FOR R&D?
Does your R&D project meet the government criteria?
WHAT IS QUALIFYING R&D EXPENDITURE?
Turn your qualifying R&D costs into valuable tax relief!
SME R&D TAX RELIEF
R&D tax relief for SMEs allows your company to take an extra 130% deduction of its qualifying costs, in addition to the normal 100% deduction from the yearly profit. Read more about R&D Calculations.
PROFIT MAKING?
Relief of up to 24.7p for every £1 spent
Profit-making SMEs can reduce their corporation tax bill, or receive a corporation tax repayment for any corporation tax already paid.
LOSS MAKING?
Relief of up to 33.35% for every £1 spent
Losses generated can be surrendered in exchange for a tax credit/cash refund at 14.5%. The amount available is the lower of the R&D enhancement and the trading loss post R&D.
SME R&D tax relief is available if you have:-
- less than 500 staff
- a turnover of under €100m or a balance sheet total under €86m
If the above doesn’t apply to you, then you may be eligible to claim Research and Development Expenditure Credit (RDEC).
To find out which R&D tax credit scheme is right for your business, contact us for further details.
OVER £27 MILLION SECURED
Jeffreys Henry LLP are specialists in hunting down every qualifying R&D cost and activity in your business.
In recent months, we’ve secured over £27 million of R&D claims on behalf of our clients.
FREE R&D ASSESSMENT
RESEARCH & DEVELOPMENT TAX RELIEF FAQS
Qualifying R&D Activities
To receive R&D Tax Relief you need to ensure that you have carried out an R&D project which meets the government definition for tax purposes and have incurred qualifying costs on this project.
HMRC qualify research and development as overcoming technological and scientific uncertainties or challenges; aiming at achieving a technological and scientific advance that couldn’t be easily worked out by a professional in the field.
Whatever size or sector, if your company is taking a risk by attempting to resolve these uncertainties, then you may be carrying out qualifying activity. This could include creating a new process, product or service or improving on an existing one.
To claim R&D relief projects must meet all of the following criteria:
- aims to create a scientific or technological advance in the overall field.
- has or has tried to overcome scientific or technological uncertainty.
- the uncertainties could not be easily worked out by a professional in the field.
Whatever your R&D project, R&D claims are increasingly being scrutinised therefore good record keeping and a strong technical narrative to substantiate your R&D claim is important.
Qualifying R&D Expenditure
Many first-time claimants find it difficult to identify the activities and costs they incurred in the last two accounting periods. Our R&D experts ensure all qualifying activities and expenditure is identified in order to maximise the claim. It is important to note, not all R&D related expenditure qualifies for R&D.
In order to claim R&D tax credits, you must have incurred revenue expenditure in relation to qualifying R&D activity. The following categories of expenditure can be included:
Staff Costs: Cost of directly employing staff who are actively engaged in R&D activity. Includes: class 1 NIC, pension fund contributions, bonuses and (if applicable) payment to subjects involved i.e. for clinical trials.
External Contractors and Freelancers: Cost of paying a staff provider for staff provided to the company, or a sub-contractor who is directly and actively engaged in carrying out R&D activity.
Consumable Items: Consumable or transformable materials used directly in carrying out R&D.
Software: Revenue expenditure incurred on computer software employed directly in R&D.
Utility Costs: Power, water and fuel used directly in carrying out R&D.
Qualifying R&D Expenditure
Many first-time claimants find it difficult to identify the activities and costs they incurred in the last two accounting periods. Our R&D experts ensure all qualifying activities and expenditure is identified in order to maximise the claim. It is important to note, not all R&D related expenditure qualifies for R&D.
In order to claim R&D tax credits, you must have incurred revenue expenditure in relation to qualifying R&D activity. The following categories of expenditure can be included:
Staff Costs: Cost of directly employing staff who are actively engaged in R&D activity. Includes: class 1 NIC, pension fund contributions, bonuses and (if applicable) payment to subjects involved i.e. for clinical trials.
External Contractors and Freelancers: Cost of paying a staff provider for staff provided to the company, or a sub-contractor who is directly and actively engaged in carrying out R&D activity.
Consumable Items: Consumable or transformable materials used directly in carrying out R&D.
Software: Revenue expenditure incurred on computer software employed directly in R&D.
Utility Costs: Power, water and fuel used directly in carrying out R&D.
What kind of projects do not qualify for R&D tax credits?
Routine analysis, copying or adaption of an existing product, process, service or material, as well as attempting to improve the cosmetic or aesthetic qualities of a product, process, service or material will not itself be R&D. However, work to create certain cosmetic or aesthetic effects through the application of technology can still qualify. Other non-qualifying activities include but are not restricted to, commercial or financial steps necessary for innovation, production, distribution, storage and repair.
How do I get my money?
If you are losing money, you can claim back up to 33% of your qualifying development spend in cash. In other words, you can get up to 33p back for every £1 you spend. If you are profit-making, your relief will offset your tax liability up to the amount of tax you owe. A profit making company, startup or SME can even get cash back if its R&D tax credit is greater than your corporation tax liability. In that case, you get the amount you’re owed in R&D tax relief that is greater than your tax liability back in cash. You can get cash back as well if you’ve already paid your corporation tax – often the case when we are filing an amended corporation tax return to cover R&D expenditure for your past financial years.
I use foreign subcontractors from outside the United Kingdom, can I claim on those costs too?
The use of sub-
How long does the process take?
Our R&D tax team can prepare your claim within 4 weeks of receiving all the necessary information. Once the claim is submitted, HMRC generally take 4 to 6 weeks to process a claim.
How many times can I claim?
You can claim R&D tax credits after each financial period (when you submit a corporation tax return) as long as you are creating a new advancement in science or technology.
Qualifying R&D Activities
To receive R&D Tax Relief you need to ensure that you have carried out an R&D project which meets the government definition for tax purposes and have incurred qualifying costs on this project.
HMRC qualify research and development as overcoming technological and scientific uncertainties or challenges; aiming at achieving a technological and scientific advance that couldn’t be easily worked out by a professional in the field.
Whatever size or sector, if your company is taking a risk by attempting to resolve these uncertainties, then you may be carrying out qualifying activity. This could include creating a new process, product or service or improving on an existing one.
To claim R&D relief projects must meet all of the following criteria:
- aims to create a scientific or technological advance in the overall field.
- has or has tried to overcome scientific or technological uncertainty.
- the uncertainties could not be easily worked out by a professional in the field.
Whatever your R&D project, R&D claims are increasingly being scrutinised therefore good record keeping and a strong technical narrative to substantiate your R&D claim is important.
Can you work with my accountant?
We work with a large number of external accounts. Our team are happy to liaise directly with your accountants to obtain all the relevant financial documentation. We will prepare a technical report and a claim statement that your accountant can use when submitting your corporation tax return.
How far back can I claim?
You can claim back two financial periods. For example, a business with an accounting year end of May 31st 2018 has until May 30th 2020 to claim or lose out.
How do you quantify a claim?
The R&D claim is based on a just and reasonable assessment of the proportion of costs relating to research and development activities, i.e. time spent by R&D staff on qualifying activities. There is no requirement to record time against R&D projects, however it could prove beneficial in ensuring a robust claim is put forward to HMRC.
Does my project qualify?
HMRC qualify research and development as overcoming technological and scientific uncertainties or challenges; aiming at achieving a technological and scientific advance that couldn’t be easily worked out by a professional in the field. In our experience, claims are often overlooked because business owners over-estimate the level of innovation required to claim. Contact us for a free assessment.
START YOUR R&D CLAIM
Jeffreys Henry LLP provide an end-to-end service that makes claiming R&D tax credits easy for you.
1
FREE R&D ASSESSMENT
We talk to your finance and tech team to hunt down every qualifying R&D activity.
Call Now: 0207 309 2222
2
R&D CLAIM PREPARATION
Our dedicated R&D account manager will work with you to document each R&D activity and split out the qualifying costs.
3
SUBMISSION TO HMRC
Once finalised, we’ll submit your claim to HMRC’s specialist R&D unit.
Jeffreys Henry LLP is an ICAEW registered accountancy firm giving you peace of mind of a robust R&D claim, with 100% success rate and no multiple year contracts.
YOUR SPECIALIST R&D TAX TEAM
For further information, or to arrange a free R&D assessment,
please contact Parminder Chattha (Head of R&D)
or Virali Patel
on 0207 309 2222.
Ian Leigh
Parminder is a Senior Corporate Tax Specialist with significant R&D Tax experience.
Parminder Chattha
Parminder is a CTA qualified Corporate Tax Specialist with significant R&D Tax experience.
Virali Patel
Virali specialises in Research and Development tax relief, an area which she has been solely focusing on since 2016.
