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R&D tax credits

What are R&D tax credits?

In the UK companies are able to claim tax relief for their R&D activity. These government schemes are designed to boost innovation by supporting businesses who seek to improve or overcome challenges or uncertainties in their products and processes. The scheme is administered by HMRC.

Large or small – there’s an R&D tax solution for your company.

If you are not sure which R&D tax credit scheme to use?

There are different types of R&D relief. Deciding which scheme to use is largely dependent on the size of your business, but there are other factors that need to be taken into account.

To find out which scheme is the best fit for your business*, start by answering the following questions:

How many people does your business employ?

What is your annual turnover?

What is the value of your balance sheet assets?

Is your R&D subsidised?

Have you applied or are you receiving State Aid for your R&D projects?

Is your business subcontracted by a larger company?

Are you no longer considered a “going concern”?

 We think the RDEC scheme is the best place to start

 Talk to us about which R&D tax relief scheme will work for you

Even though your business is probably classified as an SME we have identified some reasons why you might not be eligible for the SME R&D scheme. However, you may well be able to claim through the RDEC scheme instead.

 We think the SME R&D tax relief scheme is the best place to start

*If your business has external investors this can affect your SME status. You may need to include the figures of connected companies and partner companies when you work out if your business is an SME and decide which scheme is best for you. If you are in doubt then speak to us and we’ll run through the numbers with you.

HMRC
statistics
2020

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Over 300,000 R&D tax claims have been made*

£33.3 billion in R&D tax relief claimed*

Why choose GovGrant?

We match you with an industry, commercial or technical expert that best suits your business. Irrespective of size and complexity, we will find the right technical expert who can add the most value to your claim.

We work alongside your accountant to complement their skills so there is no conflict. Your relationship with your accountant won’t be adversely affected.

On average we can double the existing claim for new clients

GovGrant has successfully processed over 6,800 claims

We have delivered over £200m of claim benefit for our clients

Are R&D tax credits available to companies in my sector?

We find that companies from all sectors and all industries have the potential to claim UK R&D tax relief.
Follow the link below to find out more.

In the UK companies are able to claim tax relief for their R&D activity. The schemes, for SMEs and larger companies, are both administered by HMRC. Typically SMEs get back up to 33% of the amount they’ve spent on qualifying R&D. RDEC qualifying companies could get more than 10% of their R&D spending refunded.

You can claim R&D relief by entering the total qualifying expenditure on the full Company Tax Return form, CT600. Tax relief is given as either a reduction in the tax liability or, if the company is in losses, a refundable tax credit payable as cash on the amount of qualifying R&D expenditure.

For tax purposes, R&D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology.

You can claim against certain costs that are allowable for tax purposes on the project including:

  • Employment costs to the company including salaries, bonuses, some reimbursed costs, employers Class 1 National Insurance contributions, employers pension fund contributions
  • Subcontractor costs (certain restrictions apply if you are claiming under the RDEC scheme)
  • Externally Provided Workers (EPWs)
  • Software (revenue costs)
  • Consumable items including materials and utilities like light and heat
  • Clinical trials volunteers in the pharmaceutical industry

R&D tax relief may reduce your company’s tax bill if your company is liable for corporation tax or, if you make a loss, you may be able to surrender this loss and claim a tax credit. The R&D schemes enables companies with no corporation tax liability to benefit through a cash payment or a reduction of tax.

Innovation lifecycle

Our understanding of the innovation lifecycle of a project helps drive the outcomes of the claims process.

Claim all available government funding with GovGrant’s IP services

The Patent Box is closely linked with R&D tax relief and a company can often claim tax relief under both schemes.

GovGrant can offer you advice to maximise your claims across both schemes. Find out more about our IP services including Patent Box.

I liked the way my analyst understood our company’s activities and which ones qualified for the R&D scheme.