Research and Development
Research and Development is when a business invests time and money into finding new products or services, developing existing products and services or making improvements to efficiencies.
Ultimately, businesses need to adapt and evolve to stay ahead of competitors.
R&D Tax Credits is a Government scheme introduced to the UK in 2000. This scheme is designed to reward companies by allowing them to claim a tax refund based on a proportion of their R&D expenditure or reduce their tax bill.
The Research and Development tax credits scheme can be used by any company that pays corporation tax in the UK and meets the necessary R&D criteria.
Many of our clients use the money they receive back from HMRC to invest back into their Research and Development. We consider this a smart business decision – the more you invest in your R&D, the easier it is for you to stay ahead of your competitors.
Does My Business Qualify for Research and Development Tax Relief?
It’s our job to get to know your business and understand whether you qualify and how much you may be entitled to. Our tax experts will do some research to determine whether you are eligible for R&D Tax Relief.
There are four elements which need to be met in order to qualify…
Made an advancement of technology and/or knowledge.
Develop and implement a plan to overcome uncertainty and reached the desired outcome.
When planning a new project, you must have been unsure of how you will achieve the results.
4. Financial Risk
You must bear financial risk for the project, this could be something as simple as hiring new staff.
How Much Could We Get Back?
There are a number of things to take into consideration when offering a calculation on what you can claim back from HMRC. Our experts can go through this with you and ensure we claim every penny you are entitled to.
If all of the above criteria is met, you will be entitled to claim back a certain percentage of the amount you have invested already in R&D. This percentage will depend on a few things, including the size of your business.
A large business is one which 500 or more employees, as well as either an annual turnover greater than £25.9 million or a balance sheet total of more than £12.9 million
A large company can claim back up to 10% back from HMRC through the R&D Tax relief Scheme.
An SME is a small or medium enterprise and by EU definition it is a company with fewer than 250 employees. As well as either turnover (€100m) or balance sheet total (less than €86m).
SME’s make up around 99% of businesses in the UK, and therefore are extremely important to the economy.
SME companies in a loss-making position are eligible to claim back up to 33% through the R&D Tax relief scheme.
SME companies which are making a profit can claim back up to 25% from HMRC.
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