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