Thinking about making an R&D Tax Claim? Talk to us first.
Tax claims, often seen as a complex process, leaving many businesses unsure of where to start. DBS can help claiming the R&D Tax Credits.
If you are thinking about making a claim for R&D tax credits why not get in touch with us first. Here at DBS we have had a 100% success rate so far, achieving positive results for our clients. If you have any further questions about the scheme, then we are on hand to answer them. Simply call us on 0151 709 3308 and speak to Natalie Livingstone or email natalie.livingstone@dbscorporate.com
R&D Tax Relief & its Benefits
What is R&D tax relief?
R&D tax relief was put in place when the government introduced the R&D tax relief in 2000 as an incentive to UK businesses to invest in advancements in the fields of Science and Technology. It rewards businesses across any sector by allowing them to reclaim some of their R&D expenditure.
Are R&D expenses tax deductible?
R&D claims aim to either reduce the amount of profits subject to corporation tax or increase tax losses.
How to qualify for R&D tax credits?
To qualify for the scheme, UK companies must have R&D projects that aim to work towards scientific or technological advancements in new or enhanced products, services or processes in their field.
How much can we get?
How much you can claim for depends on your company size. SMEs can claim an effective 14-33% on qualifying costs. For large companies, a tax relief credit of effectively 8.8% is available under the Research and Development Expenditure Credit scheme.
Do grants affect my R&D claim application?
Possibly – Grants or subsidies may result in a company having to claim either partly or entirely through the Research and Development Expenditure Credits (RDEC) scheme. If your grant comes under the umbrella of ‘State Aid’ and was for the purpose of the R&D involved in the claim, your project will not be eligible for the SME scheme.
Eligibility for the Scheme
How far back can I claim for R&D tax relief?
You may claim for qualifying expenses made in the last two accounting periods of the company.
What types of activities qualify for R&D tax credits?
For a project to qualify, it must meet certain criteria. This includes R&D that aims to overcome technological uncertainties, advancements in Science and Technology and a competent professional in the field doesn’t have the current knowledge or capabilities to deduce what your project is aiming to achieve. This could be new or enhanced products, services or processes.
Usually you can get R&D Tax Credits if:
> You have a UK company.
> That UK company must have spent money building a technology that meets the above criteria.
> That money was spent on either:
• Staff on PAYE.
• External contractors paid day rate.
• A subcontractor who quoted a price and then delivered the project for you.
• Materials that were used up during the project and could not be sold on for full price.
• Software licences (not hosting) that you needed to deliver the project.
> That money was spent during your last two completed financial years (could be up to 36 months ago).
Can I claim for R&D even if I’m loss making?
Absolutely – the scheme is designed to help anyone who is made R&D expenditures towards science & technology advancements. If a you’re a non-profitable business, you’ll receive a cash sum.
Project isn’t finished yet. Can I still claim?
The purpose of the scheme if to reward innovation, not just successful or completed projects. If the project’s costs fall within the financial year you want to claim for and the eligibility criteria are met, then a claim can be made. If the project is ongoing there is potential for past, as well as future claims.
Can I claim for failed projects?
Yes – the purpose of the scheme is not the outcome of the project, but the investment the company made towards technological advancements and intent that matters.
Do overseas projects qualify?
Location of the R&D activity doesn’t affect the eligibility of a company for R&D tax relief. If the company is paying UK corporation tax, it may incur qualifying costs that are linked to overseas R&D activities.