R&D Tax Relief

R&D tax relief is a government financial incentive designed to encourage innovation and reward companies who invest in it. If you're doing anything novel or challenging in your field, you may qualify for tax relief and should discuss your work with one of our highly qualified R&D tax consultants to ascertain your eligibility.

According to the most up-to-date information provided by HMRC, the provisional estimated amount of total tax relief support claimed for 2021 to 2022 was £7.6 billion, an increase of 11% from the previous year. This equates to £44.1 billion of R&D expenditure (8% higher than the last year).

However, there are UK companies that are yet to tap into this incentive. Why? Because claiming R&D tax credits without a tax and industry professional working on your claim can be both complex and time consuming.

At RCK, we have spent years helping companies navigate tax relief for R&D, so are well placed to explain how the scheme works and how to utilise it effectlivley within your business.

Understanding R&D Tax Credits

HMRC (HM Revenues and Customs), the body overseeing UK tax collection, payments, and customs authority, manages the R&D tax credits initiative, that was launched by the Labour Government in 2000.

The scheme aims to provide valuable financial assistance to eligible companies to foster growth, and ultimately further their research and development via corporation tax relief, or a cash lump sum.

HMRC considers R&D to be being carried out if you are a limited company:

Modifying or improving a product, service, or process
Creating products, services, or processes
Solving technical problems with no apparent existing solution

In addition, the work must set out to resolve scientific or technological uncertainty, and is open to various industries, including manufacturers, construction firms, drug development, etc.

The main prerequisite is that you're doing something new and challenging in your field. 

Tax Credit Schemes and Changes to Expect

Two schemes formerly characterised the R&D landscape:

Small and medium-sized enterpises (SMEs)
Research and Development Expenditure Credit (RDEC) designed for large companies and SME's that were contracted by large companies or received subsidies

However, these schemes merged from accounting periods beginning on or after 1 April 2024, and here's what you need to know:

Merged schemes:
The merged scheme R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) replaced the old schemes. The expenditure rules are broadly similar to the previous schemes, but the calculation is different with both company types being able to claim different rates.
R&D-intensive SMEs get a boost:
If your company spends above 30% on R&D relative to your size, you might qualify for an enhanced rate.
Clarification on subcontractors:
The new rules will clear up queries relating to subcontracted and subsidised R&D. This has been a sticking point for many claims, so clearer guidance is welcomed.
Changes to overseas R&D:
There will be new restrictions on claiming for R&D conducted outside of the UK.  

What does this mean for you?

If you're already claiming, you might see your benefit change. If you haven't claimed before, the new system might make it more attractive (or less, depending on your situation).

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What Can You Claim For?

In the new schemes you can claim up to 27% of your R&D costs returned as cash credit in the R&D intensive scheme or a taxable credit of 20% in the merged scheme. Accordingly, the qualifying expenditure includes:
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Staff costs
Gross salaries, bonuses, employers NI (national insurance), and employers pension contributions for people directly working on R&D.
Consumables used in the R&D process
Resources utilised throughout your business's R&D process for example fuel and water.
Software licenses and data costs
Eligible computer software costs qualify for R&D activities and can be included in the claim. From 1st April 2023 cloud computing and data purchase expenses have also been eligible to include as qualifying R&D costs.
If you outsource part of your R&D to external
If you outsource part of your R&D to external contractors or agency staff, you can claim a proportion of the cost in your R&D tax relief claim.

R&D tax relief eligibility check

If your company and its projects meets the criteria below, you may qualify for R&D tax relief
and should discuss your work with one of our highly qualified R&D tax consultants to ascertain more accurately
your eligibility for claiming and relief that you could be entitled to.
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Is your company liable for corporation tax?
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Has your project sought to develop something new where previously there was no available solution?
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Did you encounter scientific or technological uncertainty during the project and was the solution difficult to create?
R&D tax relief

At a glance

SMEs can claim up to 33p for every £1 spent on qualifying R&D expenditure.
Larger companies can claim up to 15p for every £1 spent on R&D expenditure.
This innovation is applicable to products, services, processes or knowledge.

R&D Tax Relief at RCK

Industries We Help

Look at eligible R&D tax relief costs within each industry and some case studies where we have helped companies claim R&D tax credits.

How to Claim

Here's the basic process for submitting an R&D Tax Credits claim:

Identify your R&D projects

Calculate the eligible costs

Write a technical report explaining the R&D in the projects and demonstrating how the relevant qualifying costs have been apportioned

Submit the claim to HMRC via your tax return

Here is where working with a provider, such as RCK, comes in to together the technical industry knowledge with the technical knowledge of the scheme and tax. We always recommend working with a trusted provider with in-house R&D tax relief specialists when submitting a claim, in order to mitigate the risk of an enquiry.

How to Identify a Trustworthy R&D Tax Credits Advisor

You must pick the right advisor for your company. When selecting a provider to work with, look out for the following qualities:

A firm with qualified tax professionals and vocational experts in the field in which you're claiming for
Evidence of deep technical knowledge of your industry
A verifiable track record of successful claims and HMRC enquiry defence included as a contractual obligation
A compliance-focused approach
R&D tax relief
R&D tax relief

The Role of a Good Tax Advisor

A competent advisor will help your company file for an R&D tax credits claim while ensuring they accomplish the following:

Ensure your claim is robust and compliant, grounded in the associated legislation
Ensure that the claim value is maximised within the legislative boundaries and that all eligible projects and costs are accounted for
Handle any HMRC queries

The Right Way to Claim

The claims process typically takes about 4-6 weeks. Our consulting team will need access to the competent professionals at the company and will need to hold interviews with them to establish project details and facts.

The process we follow to submit an R&D tax relief claim at RCK is as follows:
Today: Initial Consultation
We'll host an introductory call to have a conversation to understand your eligibility for R&D tax relief and identify relevant projects.
One Week: Technical Deep Dive
Our industry specialists work with your team to identify all eligible projects and gather the necessary details that support your tax credit claim.
Two Weeks: Cost Analysis
We meticulously review your accounts to calculate qualifying expenditures that meet the criteria outlined in the DSIT guidelines.
One Month: Report Writing, Quality Assurance, and Report Submission
HRMC aim to pay out 85% of payable tax credits within 90 days.

The Bigger Picture

The R&D scheme is part of the government's strategy to boost the UK's innovation and productivity. By claiming, you're not just helping your business but furthering the economy by pushing the frontiers of innovation across the entire economy.

R&D tax relief

How to Get Started

Therefore, if you suspect your company is eligible for R&D tax credits, here's what you should consider as your next actionable steps: 

Project Reviews

Look into any projects you've undertaken in the previous two years, trying to identify any technical projects you've undertaken and innovation that you have carried out.

Gather Information

Once you've homed in on potential R&D Projects, gather all the pertinent information on the costs involved. This could be staff time, cost of materials, subcontractor fees, software used, etc.

Talk to a Specialist

At RCK, we understand that innovation is ultimately a cost for businesses. the scheme eases this burden and ensures that undertaking innovation can be a part of your businesses strategy to help your company stay competitive.  

Here at RCK, we would be answer any queries via our online form. Please use our contact form to submit all your queries, and we'll respond within 24 hours.

Contact Us

We would be happy to help you, please get in touch with any queries by using our contact form. We’ll get back to you within 24 hours.

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+44 (0) 7380861518

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15-18 Lime St, London EC3M 7AN

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