Research and Development Tax Credits (R&D Tax Credits) is a tax incentive put in place by the UK Government back in 2000. The purpose of Research and Development Tax Credits is to encourage companies to innovate and grow, which the Government believes is advantageous for the UK economy.
However, recent HMRC statistics have shown that many UK businesses may be missing out on R&D Tax Relief.
R&D Tax Credit Specialists
Claiming R&D Tax Credits
If your organisation interested in claiming R&D Tax Credits, our expert team can assist.
The rate of R&D tax credit which can be claimed depends upon the accounting period to which it relates. For accounting periods from 1 April 2024 a new merged scheme was introduced, although for prior accounting periods, two sperate schemes still exist.
R&D tax relief for accounting periods which began before 1 April 2024
There are two different types of R&D tax relief schemes for these periods. These depend on the size of the company and whether the project has been subcontracted to you or is subsidised (or both).
Small and medium-sized enterprise R&D tax relief
SME R&D tax relief is available for small to medium enterprises which have less than 500 staff and a turnover of under 100 million euros (or a balance sheet total under 86 million euros).
Partner and linked enterprises will need to be included when calculating if a business is a SME.
Here, for qualifying expenditure incurred on or after 1 April 2023, a higher 14.5% tax credit rate can be claimed. This is when a firm meets the intensity condition (an R&D intensity of at least 40%).
R&D expenditure credit
Expenditure credit can be claimed by large companies working on R&D projects.
Additionally, this can be claimed by SMEs, where they have been subcontracted to do R&D work by a large company or alternatively, where they have subsidised expenditure.
Research and Development tax credits for accounting periods beginning on or after 1 April 2024
There is now one merged scheme for companies of all sizes. There is also an additional scheme which provides a more generous basis of calculation. This is only available for loss-making R&D intensive SMEs.
The expenditure rules are identical for both types of relief. Where work is carried out under contract, the party initiating the research and development project is typically the party able to claim.
Merged scheme for Research and Development expenditure credit
A company of any size which is undertaking qualifying R&D is able to claim via the merged scheme.
Enhanced R&D intensive support
This is calculated in the same way as the SME scheme that existed before 01.04.2024.
A firm can claim enhanced R&D intensive support if the following are true:
- You are a SME which has less than 500 staff and also has a turnover of under 100 million euros (or a balance sheet total which is under 86 million euros)
- For tax purposes, you make a trading loss before relief is calculated
- The firm meets the R&D intensity condition, meaning an R&D intensity of at least thirty percent.
The same expenditure rules are valid as for the merged scheme.
Alexander & Co work on a contingency fee basis (though fixed fee can also be quoted for if required). All initial R&D consultations are free of charge. Therefore, we only charge if HMRC accepts the claim and you get a repayment/reduction in your liability. The claim is prepared by a Chartered Tax Advisor. The claim should only take two to three hours of your time – we do all the work for you. For more information, contact our R&D Tax Credit specialists. Our fees are some of the most competitive in the industry and are always contingent on a claim being successful.
Who is eligible for Research and Development Tax Credits?
A common misconception is that R&D tax relief only applies to science and technology companies. However, there are a whole host of industries who can reap the benefits from R&D Tax Credits, from the hospitality industry to property. To qualify, you must be a business that:
- Seeks to advance their knowledge
- Improves a service or product
- Solves uncertainties in the process
What kind of projects qualify for Research and Development Tax Credits?
Your R&D project does not need to be unique and does not need to succeed. Examples of R&D projects where we have successfully assisted our clients include:
- The design of bespoke machinery for two different manufacturers in relation to paper products.
- The development of new bespoke software for a client’s internal accounting and operations systems. This was where a solution was not readily available in the marketplace.
- Several claims relating to new products and processes that clients have developed. This is where they are either completely new or an improvement on what is available in the marketplace.
These are just a few examples of the many claims we have undertaken. Also note that claims are available where R&D has been subcontracted out to another party. For more information, please contact us.
Get expert advice from our Research and Development Tax Credit specialists
Our specialist, in-house R&D tax relief specialists can support you with your claim. This will greatly assist, as claiming yourself can be a complicated and prolonged endeavour. We can assist you with claims for the past two accounting periods. This can often result in a large sum of corporation tax repaid or R&D tax credits.
It’s important to find out if you are eligible to make a claim immediately. This is because you do not want to miss any deadlines and potentially lose out on significant credits. For more information, contact our friendly and professional team today. Please call us on 0161 832 4841, email info@alexander.co.uk or fill out the form below and we’ll be in touch shortly.
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