Many UK businesses want to know whether they qualify for R&D tax credits, powerful tools that they can use to slash their tax bills and claw money back from HMRC. While the rules around R&D tax credits are simple on the face of it, the devil is in the details.
Some accountants will tell you that you do not qualify for research and development credits. Unfortunately, this is not always the case. While many accountants are well informed on specialist taxation, such as that required with HMRC and Research and Development relief, others are not.
We ask relevant questions to determine a companies eligibility as per the rules set out by HMRC. Experience cannot be taught, and we apply our many thousands of case history claims to determine the relevance of an R&D claim to the activities that your business has carried out. It’s not always clear cut what counts as R&D spending, and what doesn’t, so you often need specialists with years of experience with the rules on your side to see whether you’re eligible to make a claim. After all, if you’re researching and developing technologies, products and services that will benefit society, you should be able to claim tax relief.
Are You Eligible For R&D Tax Credits?
So what are R&D tax credits, exactly? An R&D tax credit is a government incentive for companies to invest in new products, services and technologies. The tax authorities base the level of the tax credit on the amount of money that you spend in what they classify as research and development activities. R&D tax credits let you receive a cash payment from the government if you’re a loss-making business or receive a reduction in corporation tax if you’re profitable.
What’s interesting about R&D tax credits is the scope of activities that could fall into the research and development category. What’s more, opportunities for clawing money back from the taxman existing in practically every sector. You don’t have to be in science, tech, engineering, pharma or any of the other industries typically associated with R&D spending to benefit: this is a tax incentive that applies across the board.
So, is your business eligible for tax relief?
If you want to qualify for R&D tax credits, you have to fulfil three essential criteria. First, you have to be a limited company in the UK that pays corporation tax on its profits (the 19 per cent tax on any money you make over your operating costs). Second, you have to be carrying out so-called “qualifying” research and development activities. And, finally, you need to be spending money on these projects. So, for instance, if you are developing a new medicine, you need to have spent money on the lab, technicians and equipment.
The question of what counts as “qualifying research and development activities” however, is a complex one. Don’t assume that your business doesn’t fit into that category. Speak with us today to find out whether you’re in this category and can save money or get grants and business funding.