Government Incentive for Innovation

If your UK business has spent money on innovation through research and development, you could be eligible for R&D tax relief to help recover costs and support future growth. Our trusted R&D Tax Credits service can help you claim up to 27% of your R&D costs.

Expert R&D Tax Credits Guidance

At RnD Tax Relief, we make the R&D tax claim process simple and hassle-free. We connect you with the best R&D tax relief advisors, R&D tax relief consultants, R&D tax relief specialists, and R&D tax relief experts, ensuring you get the right guidance to maximise your R&D tax credit claim.

Industry Expertise & R&D Tax Credits Success

Our trusted professionals have experience across various industries, including science, engineering, software, and healthcare. They understand the technical details of your R&D projects and can help present your R&D tax relief claim clearly to maximize your R&D Tax Credits

What Are R&D Tax Credits?

A Government Incentive for Innovation

R&D tax credits are a government tax relief designed to encourage companies to invest in research and development. Essentially, they work by either reducing your corporation tax bill or providing you with a cash payment if your company isn’t yet profitable. The scheme is deliberately broad to encompass various types of innovation across many sectors, meaning that activities you might consider “just part of the job” could actually qualify for significant R&D tax relief.

The UK government introduced these R&D Tax Credits incentives with the aim of boosting the country’s productivity and maintaining its competitive edge in the global marketplace.

Key Benefits: Cash Credits, Reduced Tax Bills

The advantages of claiming R&D tax credits are substantial. For profitable companies, the R&D tax relief can significantly reduce your corporation tax liability. For businesses operating at a loss, the scheme can result in a payable credit, meaning HMRC will actually send you a cash payment.

The financial benefits can be considerable. Depending on your company size and the scheme you’re claiming under, you could recover up to 33.35% of your qualifying R&D expenditure. This means for every £100,000 spent on eligible R&D activities, you could potentially receive £33,350 back in R&D tax relief.

Am I Eligible? Understanding Qualification

The Core Criteria: Project, Advancement, and Uncertainty

At its heart, eligibility for R&D tax credits hinges on three fundamental criteria that your project must satisfy:

• Your work must be part of a specific project that aims to achieve an advance in science or technology
• The project must seek to achieve a scientific or technological advancement
• The project must attempt to overcome scientific or technological uncertainty

All three criteria must be present for your project to qualify for R&D tax credits.

SME Scheme Benefits

For profitable SMEs, the R&D Tax Relief scheme allows you to deduct an additional percentage of your qualifying R&D expenditure from your taxable profits, resulting in corporation tax savings of up to 21.5% on R&D expenditure.

For loss-making SMEs, you can surrender your losses for a payable R&D tax credit worth up to 10% of the qualifying R&D expenditure, meaning you receive cash from HMRC even without being profitable.

Large Companies and the RDEC Scheme

The R&D Expenditure Credit (RDEC) serves large companies with a different rate and different tax treatment. RDEC is paid above-the-line and is subject to corporation tax.

For expenditure from 1st April 2023, the gross rate is 20% of eligible R&D expenditure, providing companies with substantial R&D tax relief for their innovation investments.

Enhanced R&D Intensive Support (ERIS)

For companies that make R&D activities a cornerstone of their business, enhanced relief is available through the R&D-intensive SMEs scheme. This offers a higher R&D tax credit rate for companies who spend at least 40% of their total expenditure on R&D activities.

These SMEs can surrender their losses at a higher rate of 14.5% and receive enhanced R&D tax credits as a cash credit.

Staff Costs

The main areas of R&D costs that can be claimed include staff costs such as:

• Gross pay, employer’s NI, reimbursed expenses
• Employer’s pension contributions
• Agency workers (externally provided workers)
• Subcontractors/freelancers working on R&D projects

Software & Materials

Qualifying R&D costs also include:

• Software license costs for R&D activities
• Cloud computing costs & data licenses
• Consumable items (heat, light and power)
• Materials and equipment used in the R&D process

Subcontracted R&D Work

If your company subcontracts some of its R&D activities to another party, you may be able to include these costs in your R&D tax relief claim, but special rules apply depending on your company’s size and the nature of the subcontractor.

Under the merged scheme from April 2024, all companies can claim 65% of the costs paid to unconnected subcontractors for R&D activities, as outlined in HMRC’s official guidance.