CLAIM ELIGIBILITY
Does Your business meet the R&D incentives criteria
In order to be eligible for Research and Development Tax Relief, you must:
- Must be a limited company in the UK that is subject to Corporation Tax.
- Company must be a ‘going concern’
- Company must have undertaken or carried out research and development projects and activities.
- Company must have incurred costs and spending on the research and development projects and activities.
What are the qualifying costs in R&D
Each sector and each project will vary as to the amount of and type of expenditure undertaken in furtherance of the R&D project. The typical costs that would be consdired appropriate include :
- Human Resource: This includes peoples salaries, wages, employers NIC’s and pension contributions.
- Service by Subcontractors: Often many projects have subcontractors who bring in specialist skill and knowledge to advance science and technology in a chosen sector as well as to solve the scientific and technological uncertainty.
- Utilities: Utilities that are required for conducting of the R&D including heating, lighting and power.
- Software: Most of the projects whether in the construction or healthcare or manufacturing always has significant amount of specialist and bespoken computer software related costs including design, development and maintenance.
- Consumables: These are raw ingredients and material used in a given project which may include items used for design and development and testing of the new product such as steel, electronic moving parts/components, perishable goods etc.
Can R&D help
My company Grow?
R&D Tax Credit Relief has been specifically set up by the Government to encourage advancement in the field of science, technology and innovation. By obtaining a successful R&D Tax Credit relief means that the companies will have more money to spend in further innovation and growth of the company and its product and service lines.
Government Guidelines:
Research and Development (R&D) reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science - like economics - or a theoretical field - such as pure maths.
The project must relate to your company’s trade - either an existing one, or one that you intend to start up based on the results of the R&D.
To get R&D relief you need to explain how a project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
Your project may research or develop a new process, product or service or improve on an existing one.
There are two types of companies that can claim Research and Development Relief as follows
Small and Medium Sized Enterprise (SME)- If you are an SME with less than 500 staff and a turnover of under €100m or a balance sheet total under €86m.
- If you are an SME and undertake qualifying R&D, then R&D tax relief allows companies to:
- deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
- claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss
Large Companies
- If you are an SME with less than 500 staff and a turnover of under €100m or a balance sheet total under €86m.
- Large companies that are that undertake qualifying Research and Development are ale to Research and Development Expenditure Credit (“RDEC”). RDEC is the new scheme that replaced large company scheme in April 2016. RDEC allows a credit calculated at 13% of the companies qualifying R&D expenditure.
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