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 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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