How to claim R&D tax credits
Innovation is the lifeblood of a growing company. In the UK, companies can receive financial support from HMRC to offset the costs of research and development. These are known as R&D tax credits.
Many companies miss out on these benefits because they are not aware of the process, what qualifies as R&D and do not know how to claim R&D tax credits.
What are R&D tax credits?
Research and development (R&D) tax credits are a UK government initiative aimed at incentivising companies to invest in innovation. Companies use R&D tax credits against the costs of innovation.
How do R&D tax credits work?
Any company in any industry can undertake R&D and therefore qualify for tax credits. The criteria are defined by HMRC as a project in your existing trade or one you intend to start up that:
- Looks for an advance in science and technology
- Has to overcome uncertainty
- Tries to overcome this uncertainty
- Could not be easily worked out by a professional in the field.
Reference: HMRC ‘Claiming research and development tax credits‘ (2020)
For example, if your company is developing a new product, process or service then that could qualify. Similarly, work to enhance or develop an existing service, product or process could also qualify.
Which costs can I claim R&D tax credits for?
- Costs associated with employing staff including salaries, pension contributions, employer National Insurance and expenses
- Software
- Consultants and sub-contractors
- Raw materials and consumables which include heating, lighting and power costs used in the R&D process.
Tax credits can be received as either a cash payment or a Corporate Tax reduction.
How to claim R&D tax credits
Claiming R&D tax credits requires a company to determine all qualifying costs directly attributable to R&D to calculate your ‘expenditure credit’. The R&D tax claim is then submitted via your full Company Tax return to HMRC.
Why use Consilium Chartered Accountants for an R&D tax credit claim?
There is no requirement for a company to use a firm of chartered accountants or tax advisers to submit R&D tax credit claims. The advantages, however, of utilising specialist skills and resources to process the claim make it a smart company decision.
Appointing Consilium Chartered Accountants to process your claim offers a host of benefits, including:
- Expertise in determining whether costs qualify for R&D tax credits
- Analysing all costs associated with R&D projects, saving you/your finance team time auditing expenditure
- Specialist tax knowledge and a strong track record of making successful, supportable R&D tax credit claims
- A good working relationship with HMRC specialist R&D unit
- Fixed fees are quoted in advance rather than success-based percentage fees.
For a confidential discussion about how to claim R&D tax credits, please contact our Tax Partner Craig Coyle. Alternatively, learn more about our specialist R&D tax credit team or our Tax compliance and Tax planning services.
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