This is a quick guide to R&D Tax Credits and whether you can qualify and what you can qualify for.

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What are R&D Tax Credits?

Research and Development (R&D) Tax Credits are an enhanced expenditure tax deduction offered by the government for investing in innovation. They can be a valuable method of cash for businesses to be able to invest in further growth and even more R&D.

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How do R&D Tax Credits work?

Companies that spend money developing new products, services or process or even enhancing existing ones, are eligible to make and R&D Tax Credit claim. If your company is spending money on innovation then a claim can likely be made for either a corporation tax reduction or cash payment. There is a huge scope for claims across many industries and you can often claim for two previous accounting periods if you are claiming for the first time.

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Can I claim an R&D Tax Credit?

To be able eligible to claim R&D Tax Credits, you must:

• Be a limited company in the UK
• Be subject to Corporation Tax.
• Have carried out qualifying research and development activities.
• Have spent money on these projects.

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What counts as an R&D activity?

The R&D claim criteria set out by the government are purposefully broad. No matter what size or sector you are in, if your company is taking a risk by attempting to ‘resolve scientific or technological uncertainties’ then you may be carrying out a qualifying activity. This could include:

• Creating new products, services or processes
• Changing or modifying an existing product, service or process

For a project to qualify for an R&D claim, you should have set-out to achieve an advance/improvement. That advance must be in the field of science or technology. It cannot just be in your company’s own knowledge. Your project can still qualify for an R&D claim if the advance has already been achieved by someone else but the details are not readily available. This could be because they are a trade secret, for example.

It’s important to remember that an R&D claim is inevitably not always successful. If your project is ultimately unsuccessful but it sought a solution which was not evident at the outset, then it could still qualify for an R&D claim.

Normally, routine copying of existing products, processes, materials, devices or services will not usually qualify for an R&D claim. Work carried out to improve the cosmetic or aesthetic qualities of a process, material, device, product or service will not itself be an R&D claim.

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What are the next steps?

If you think you are a qualifying company undertaking qualifying activity then you should book an initial call with us to run through this. You can do that right here

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