Research & Development (R&D) tax reliefs can provide a valuable incentive for any company.

The R&D tax relief was first introduced for expenditure incurred on or after 1 August 2008. It has been enhanced on several occasions in the succeeding years and it currently provides an uplift for tax purposes on any R&D qualifying costs of 125 per-cent. This means that an SME spending £100,000 on any qualifying R&D activity in effect may deduct £225,000 from income when calculating its tax liabilities for the relevant period. The company therefore benefits from either reduced tax liabilities or potentially a cash tax repayment from HMRC.

A successful R&D tax claim

The key to a successful R&D tax claim is to identify the project early and to ensure that all eligible costs are included within the R&D claim.

To qualify for R&D tax reliefs, your R&D activity must seek to resolve scientific or technological uncertainties and identifying these and the process undertaken to resolve them is a fundamental part of the process.

There are two schemes currently in operation:

    • the SME scheme which applies to companies that have 500 employees or less and either turnover not in excess of €100 million or Balance Sheet assets not in excess of €86 million,

    • a large company scheme for those that do not meet the above criteria.

Both schemes provide enhanced relief on qualifying expenditure which primarily includes:

    • Staffing costs for all individuals employed, fully or in part, directly in relation to the R&D activity;

    • Payments to sub-contractors or externally provided workers;

    • Consumable items used during the R&D process.

What we do

We will work with you to:

    • Identify the qualifying project for R&D purposes and ensure there is full analysis of the activity available for HMRC;

    • Identify all relevant costs that can be claimed and explain the effect of using sub-contractors and externally provided workers;

    • Identify whether you are able to qualify within the SME or large company scheme;

    • Provide a prompt and robust claim for submission to HMRC which seeks to maximise the relief available;

    • Advise on the benefit of claiming any repayable tax credit or retaining the benefit of the losses for future use.

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