We talk about Research and Development (R&D) Tax Credits a lot, but that’s because it’s such a fantastic scheme and we’ve been processing successful claims for over a decade now.
R&D tax relief has been around since 2000, and this year, the government announced a 16% increase in claims since 2020. The overall claim amount has also increased by 19% – which indicates that there are lots of innovative R&D projects happening!
If you’re not familiar with R&D tax credits or aren’t quite sure if they could benefit your business, don’t worry, within this blog we’ll cover what you need to know about R&D tax credits in 2021!
To start with, what are R&D Tax Credits?
Research and Development Tax Credits are part of a UK tax incentive provided by the Government.
The incentive aims to encourage businesses to engage and invest in science and technology research and development, by allowing them to utilise some of their R&D costs for tax relief.
Who can claim?
If your business is doing work to research or develop an advance in your field, you could be able to claim. You may also be able to claim if your business is working on a new process, product, or service, or if you’re working on improving an existing one. It’s worth keeping in mind that the project must be something innovative, new and not yet available.
The government has set the following guidelines regarding businesses who’re able to claim R&D relief. “The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology.”
“Your project must aim to create an advance in the overall field, not just for your business. This means an advance cannot just be an existing technology that has been used for the first time in your sector.”
What should I be aware of?
• It’s worth noting that it can even be claimed on unsuccessful projects!
• The deadline for submitting your claim is 24 months after your accounting period ends.
• There’s SME relief – Which is suitable if your company has fewer than 500 staff and a turnover under 100 million or 86 million in gross assets.
• There’s also the large company relief scheme – Suitable if you have over 500 staff, more than 100 million in turn over or 86 million in gross assets.
What can I actually claim for?
You’ll be pleased to know that if your work or project is eligible, you can claim for a whole range of costs including:
• Employee costs specific to the R&D project (e.g. salaries, employers NIC, some reimbursed expenses and employers pension contributions)
• Utilities
• Cost of subcontractors and freelancers
• Cost of materials
• Cost of consumables
• Some specialised software
• Clinical trials
• Prototypes
It’s worth noting that the amount you can claim for each of the above can vary.
What’s next?
Need more advice or you’re thinking it’s time to submit a claim, we’re here to help! Get in touch today.
