Of the 5.8 million SME businesses in the UK, only around 52,000 made claims for R&D tax credits in 2018/19.
Professional advice can help you to benefit from the tax reliefs available - providing a welcome cash boost for your business and reducing your corporation tax burden.
R&D tax relief can be claimed by companies that have incurred expenditure on qualifying activities that are relevant to the company’s trade. A project should address an area of scientific or technological uncertainty and be innovative.
A company can claim enhanced corporation tax deductions against its taxable profits for expenditure that qualifies.
At Azets we have a deep understanding as to what counts as qualifying expenditure and what a compliant claim might look like. Our expert team can then help you negotiate your claim with HMRC to ensure it is successful.
R&D tax credits relief represents an additional corporation tax reduction of 25% of the expenditure incurred, which can be cash back in your pocket or ready to reinvest in your business.
SME businesses in the UK
R&D tax claims in 2018/19
Reduction in corporation tax through R&D
UK’s total R&D expenditure (of GDP)
If you run an SME business, it goes without saying that making the most of the UK Government’s tax credits and grants for research and development is a benefit well worth considering.
Designed to encourage UK companies to undertake development work on new technologies that substantially improve their products, processes, devices, materials and/or services, research and development (R&D) tax credits can significantly reduce your company’s corporation tax liability, and even get you some cash back.
Whether you are a start-up, small to medium-sized business or large company, our dedicated and experienced R&D tax credits team will help you identify where you could benefit from the R&D tax credits scheme, giving you advice on how to claim and helping you file with HMRC.
With a large existing client base and impressive credentials in R&D tax credits, our specialists have an excellent track record in making successful, HMRC-compliant R&D tax relief claims and have delivered significant tax savings for our clients.
Thanks to our wealth of experience of making R&D tax relief claims in a wide range of sectors, we can make the process as quick and efficient as possible for you. By seeking to deeply understand your business, we can identify projects with a potential claim that others will miss, and successfully negotiate these claims with HMRC.
Given that R&D tax credits can deliver a repayment of 24.7% of qualifying expenditure for SME businesses, it’s an area that’s certainly worth exploring.
Importantly, R&D tax credits aren’t just reserved for traditional manufacturing and engineering companies, or even those operating in the software, aerospace, automotive or energy sectors. If you have a problem and use some element of science or technology to try to fix it, then you might have the potential for a claim – even if you are an early-stage, unprofitable business. What’s more, even if your development is abortive or unsuccessful, it still counts.
A claim must be made within two years of the eligible expenditure being incurred, depending on your company’s accounting period. There are some examples of the sort of costs that might qualify below.
For time spent directly and indirectly on R&D
Including power and water costs, software used for R&D
For certain qualifying activities
For developing new products
R&D relief under the SME scheme is not available if the R&D project has had the benefit of a grant or subsidy. There may, however, be an alternative claim available to the company. This is known as the Research and Development Expenditure Credit scheme (RDEC).
RDEC allows the SME to claim a taxable credit of 13% (12% before April 2020). As this amount is taxable it is known as an ‘above the line’ credit.
The credit received may be used to settle corporation tax liabilities of the current, future or prior accountings periods subject to certain limitations and calculations. Where there is no corporation tax due the amount can be used to settle other tax debts or can be repaid net of tax.
The RDEC relief is also available to an SME for expenditure incurred on R&D that is contracted to it by a large company. This relief, whilst less generous than is available.
Research and development tax credits are a valuable source of tax planning for a wide variety of businesses. Despite this, many clients we speak to are often unaware that they qualify.
Using our deep knowledge of the government support available, the qualifying criteria, and the application process, we’ll help you unlock these incentives and cash injections.
Looking at your recent undertakings and current and future projects, our team will give you the right advice to understand the full range of R&D activities that can qualify for government support, and access all of the available incentives as effectively as possible.
Any company (including limited liability partnerships) in any sector and at any stage of development may qualify for R&D tax credits, even if it is loss-making.
We successfully help businesses claim for R&D tax relief that are:
At Azets, our specialist trusted business advisors are on hand to offer R&D tax relief advice and have a wealth of experience in making R&D claims in a wide range of industries and sectors. Speak to a member of the team today.