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Research and Development (R&D) tax relief is a government incentive which can reduce a company's tax liability. It was designed to encourage innovation and to act as a reward to companies who invest in it.
While recent changes to the R&D framework mean there are new complexities to consider, working with a specialist team who understands the legislation and are also industry experts is critical to preparing a robust R&D tax relief claim.
R&D Tax Credits were introduced by the government and HMRC (HM Revenues and Customs), the body overseeing UK tax collection administers the R&D tax credits initiative.
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 software, life sciences and engineering.
Gross salaries, bonuses, employers NI (national insurance), and employers pension contributions are eligible.
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Resources utilised throughout your business's R&D process for example fuel and water.
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Eligible computer software costs qualify for R&D tax relief and can be included in the claim. From accounting periods April 1st '23 data and cloud computing costs can also be eligible.
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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.
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Look at eligible R&D tax relief costs within some of the industries we support, and some case studies where we have helped companies claim R&D tax credits.
If your company and its projects meets the criteria below, you may qualify for R&D tax relief.
Is your company liable for corporation tax?
Has your project sought to develop something new where previously there was no available solution?
Did you encounter scientific or technological uncertainty during the project and was the solution difficult to create?
Meet and greet with technical consultants. Consultant allocation based on the company's industry and the consultants' qualifications and experience.
Eligibility check against the R&D criteria and legislation.
Technical discussions with competent professionals to determine qualifying projects for claim basis.
Review of payroll and ledgers for formation of apportionment methodology to corroborate technical analysis.
Consolidation of technical and financial analysis within a report to underpin the R&D tax relief claim.
Compliance review takes place to validate the report against HMRC’s guidelines.
Preparation of Additional Information Form (AIF), a required filing to be made alongside amended tax return and report.
The AIF, along with the report, is sent to the client for review and authorisation that the claim is representative of activities undertaken by the company. This is an opportunity for final validation.
Forms and documents relevant to the claim are submitted to HMRC.
Regular meetings will be held between the R&D agent and the company’s Tax/Finance team to keep all relevant stakeholders informed on the status of the claim.
Check-ins throughout the year to guide record keeping in advance of new claim period.
*This process is flexible and can be adapted based on a client's preferences as to their involvement within the process.
R&D claims were previously made through two main schemes:
These schemes merged from accounting periods beginning on or after 1 April 2024, and here's what you need to know:
The SME R&D scheme provides relief of qualifying R&D incurred costs for micro, small and medium-sized companies. This rate is up to a maximum of 33% (pre April '23) and up to a limit of 27% (post April '23).
If your company spends above 30% on R&D relative to your size, you might qualify for an enhanced rate.
When claiming for accounting periods after April 2024, claims must go through the merged scheme. Essentially, this is a continuation of RDEC scheme, with some changes regarding sub-contracting.
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We have worked with RCK Chartered Tax Advisors for a few years now, and their service continues to be nothing short of outstanding. Their support with our corporate tax credits has been invaluable, and the process is always handled with professionalism, clarity, and genuine care. A special shout out to Harrison Jones, Senior Associate Manager, who has been exceptional throughout. His attention to detail, responsiveness, and deep expertise have made what could have been a complex process feel smooth and stress-free. RCK have become a trusted partner for us now, and we wouldn't hesitate to recommend them to any business looking for reliable and knowledgeable tax advisors.
Managing Director - TPWT
Very professional (and friendly). Made the claiming process exceptionally smooth. If you are looking for high confidence in your claim and minimal disruption to your company, look no further. Very impressed.
Director - Impact Surgical
The RCK team have been top draw. Highly professional and reliable, got the job done quickly. Highly recommend.
CEO & Co-founder at Hyper
I engaged RCK for several of my clients and there were all extremely happy with their services and the results that the achieved. I would be more than happy to recommend their company.
Bookkeeper: CAG Housing & Development Limited
During the early stages of our engagement with you, our expert consultant and compliance team will offer a free, no-obligation review of prior R&D tax submissions to ensure your claim is accurately calculated, fully aligns fully with HMRCs updated guidance, and is compliant with the relevant tax legislation.
ContactWe 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.