Is your company eligible for tax credits? - Research and Development (R&D)

With Brexit looming, the government has pressed the need for Britain to have a technology-driven economy. Affirming this position they have committed to “the largest boost to R&D support for 40 years with a further £2.3 billion investment in 2021-22[1].”

As part of this support, funds are available in the form of R&D tax credits, which are available to companies who have engaged in qualifying R&D. Many companies have not realised that they may qualify for a share in this much under-subscribed relief.

What is R&D and why might I be eligible?

To be eligible to claim R&D relief from HMRC need you to explain:-

  • That you are seeking an advancement in science and technology (this is not exclusively for lab technicians – any business could qualify)
  • Any uncertainties you have faced surrounding the changes you are making
  • How you have sought to overcome these uncertainties (it does not matter whether you have overcome them or not)

R&D relief is not restricted to new products, services or processes, but can include changes or improvements to those already in existence.

Relief available

Companies engaged in qualifying R&D can be eligible for an enhanced corporation tax deduction equal to 230% of the R&D expenditure. For companies that are already profitable, this equates to a reduction in their corporation tax bill of up to almost 25%.

For loss-making companies incurring R&D expenditure in the year, it is possible to surrender some of the R&D-related loss to HMRC in return for tax credits. This equates to a cash repayment of up to 33% of the loss.

Companies who have already submitted their tax return can still be eligible for this relief and so there may still be value to be unlocked in connection with the prior year. There is a time limit, however, so make sure you do not lose out.

How can we help?

If you would like an initial consultation to discuss whether your company is eligible to make a claim, we would love to hear from you.

We take a very proactive approach throughout the whole process. In the last 12 months we have already helped our clients claim over £400,000 of value through our tax work and our fees are very competitive.

[1] 2017 Autumn Budget announcement

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.