R&D Tax Credits

What should you know!
What HDH Accountants can help with

What are R&D Tax Credits?

R&D Tax Credits are a government incentive that was introduced to reward eligible UK Limited Companies. The incentive provides reductions, rebates or payable credits of corporation tax payable for monies spent on eligible R&D activities.

When did R&D Tax Credits incentive start?

The Government in 2000 rolled out the R&D Tax Credit incentive and it has gained substantial traction in the last few years, supporting innovative businesses of all sizes to continue to grow and remain competitive on the global market.

Calculation Example

As a simplified example; for instance if an SME had developers working exclusively on an eligible R&D project and paid them a total of £150,000 per year, they could use the incentive record that expense at £345,000 (230% x £150,000). The additional £195,000 of the expenses would mean the company’s taxable profit would be reduced.

The calculation shows how this affects a profitable company; £29,625 from corporation tax savings and the payable tax credit. In total they would receive back 19.75% of their R&D investment. If you are not eligible to claim the relief as an SME you might however, still be able to claim under the RDEC incentive.

Do you qualify for the R&D Tax Credits incentive?

Creating new products, processes, or services.

 

If you’re unsure if your project is viable, or if you could theoretically achieve it but are unsure how to complete it in practice, you could indeed be resolving technological uncertainties and be carrying out qualifying R&D.

Adapting an existing product, process, or service.

 

Also, within HMRC’s research and development definition, failed projects can also be eligible under the R&D Tax Incentive. As long as the work carried out on the project is deemed as qualifying activity before the project itself is discontinued, there may be eligible costs to include in your claim.

Steps for an R&D Tax Credit Claim

Step 1

The first step is to submit a R&D Tax Credit Claim. After investing in eligible projects, you submit the forms in to us and we will perform all the tasks and submit the form on your behalf.

Step 1

The first step is to submit a R&D Tax Credit Claim. After investing in eligible projects, you submit the forms in to us and we will perform all the tasks and submit the form on your behalf.

Step 2

Working with our Partner firm Counting King we will work to claim back up to 33% of the eligible costs incurred from the R&D development within the company.

Step 2

Working with our Partner firm Counting King we will work to claim back up to 33% of the eligible costs incurred from the R&D development within the company.

Step 3

Once you have seen the benefits of the R&D Incentive and have received the benefit we would recommend growing your business (and re-invest in R&D eligible projects for a larger incentive).

Step 3

Once you have seen the benefits of the R&D Incentive and have received the benefit we would recommend growing your business (and re-invest in R&D eligible projects for a larger incentive).

For any help or advice please contact us:

Start your R&D Claim now!

You’re able to submit an R&D claim for the last two financial years as it follows the amendment window of the company’s CT return, this means if you haven’t made a claim before, you will be eligible for a tax repayment for those years. If your company has already paid the corporation tax, then you’ll receive the overpaid tax as a rebate from HMRC.

This incentive also benefits loss-making companies, giving the option to surrender losses created (up to 230%) at 14.5% or to carry the additional losses credited forward to be used against future profit.

Take advantage of our FREE 1 hour consultation for any additional services that you’d like to take advantage of today. 

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