Claiming R&D Tax Credits – What can you actually claim for?

Recently, there have been huge changes to R&D tax credits that have left many unsure of how the process works and what they are allowed to claim back from the government. That’s why our tax experts have put together a guide to assist you in finding out what R&D you are allowed to claim back for your business.

R&D tax credit restrictions

Before we begin, it’s worth mentioning that only limited companies can claim, as they pay corporation tax. Sole Traders, charities and partnerships can not claim for R&D tax credits.

What R&D tax relief can you claim?

If you meet the necessary requirements for R&D, claims can be made on the following:

  • Materials – including transformable or consumable materials directly used in the R&D process. Since 2015, relief is only available if those items are fully expended by the R&D activity.
  • Staff Costs – Claiming for the cost of employing staff members who are directly involved in carrying out R&D itself
  • Software – Claims on any expenditure on computer software used directly in R&D
  • Utility Costs – Water, fuel, and power directly used in developing R&D can be taken out. However, not for things such as data costs or telecommunications.
  • Externally provided subcontractors and workers – This will cover the cost of paying a staff provider, providing the company with staff, or 65% of any costs carried out by a subcontractor who is actively involved in the R&D process.

The primary guide from HMRC delves into this further. So make sure you also check out their guide to help determine what qualifies for R&D tax relief.

Use our complimentary service to check if you are eligible to claim.

R&D tax credit claim – the process

If you are considering an R&D tax credit claim, there are a couple of options. 

  • You can claim yourself; however, the guidance from HMRC for claiming tax credits is hundreds of pages long, which puts most businesses off doing it themselves. You may run the risk of getting it wrong, which can lead to under- claiming and over- claiming, with the latter prompting an investigation.
  • Your accountant can help with an R&D tax credit claim, which is made via the company’s annual Corporation Tax return. If your company wants to convert some of the relief into a cash tax credit, this should also be noted on the Company Tax Return. You will either receive a cash tax credit from HMRC or your Corporation Tax bill will be reduced, depending on the circumstances of your claim. A company will usually have two years from the end of the Corporation Tax period, to claim R&D tax credit.

If you need assistance claiming R&D tax credit, our expert accountants can assist. Get in touch with us today.

Can I make an R&D tax credit claim even though I’m making a loss?

The government wants companies spending money, and the more money they spend on R&D means the higher the benefit they will receive. Some loss making companies may be able to receive cash credits.

R&D tax relief accountants in Manchester and London

Alexander & Co’s many years of expertise ensures that all research and development claims are conducted correctly, accurately and to the highest professional standards.

For more information regarding on R&D tax credit claims, make sure to get in touch with our experts in Manchester and London.


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