Can I claim for R & D tax credit?

In the UK companies are able to claim tax relief for their R&D activities. This government scheme is designed to boost innovation by supporting SMEs who seek to improve or overcome challenges or uncertainties in their products and processes. The scheme is administered by HMRC.

Who qualifies?

You must be a limited company and registered to pay corporation tax in the UK. Sole traders, partnerships and public liability companies are not eligible for the scheme. The small and medium-sized research and development relief is the most common option for small businesses. You must have less than 500 staff and a turnover of less than £100 million.

What does it mean for you?

Broadly, you qualify for the SME R&D tax relief scheme if you employ fewer than 500 employees and have either an annual turnover under €100 million or a balance sheet under €86 million. There

are other criteria that apply so if you can’t use the SME scheme it may be possible to claim under the RDEC scheme.

You also need to be able to demonstrate your R&D activity, but the definition of R&D is broader than you might think.

Ask yourself:

● Do you design and make new products?

● Do you seek to improve processes, services, materials or devices?

● Do you make prototypes or perform testing?

● Do you develop software or IT solutions?

● Have you invested in failed projects or developed products that are

never launched?

● Do you employ any staff with a technical or scientific background?

For SME R&D relief, you can claim:

  • Staff costs for those working directly on the project, as well as admin or support staff for the project, and 65% of relevant agency staff costs. This includes a proportion of wages, Class 1 National Insurance contributions and pension contributions.

  • 65% of subcontractor costs.

  • Software licence fees.

  • Consumable items like materials and utilities.

  • Clinical trials volunteers if you’re in the pharmaceutical industry.

There are some exceptions that can’t be claimed for, such as patents, trademarks, rent, rates, as well as the production and distribution of goods and services.

How can we help?

It takes an experienced eye to identify the full potential of your claim. We will give you an expert who knows about your industry and speaks your language. They will get to know your business so that they can identify what you do to develop and

innovate your products or services.

It is then a question of preparing the claim. We know what HMRC is looking

for, so we can ensure your claim is maximised and robust – which gives you the best chance of having your claim approved.

We manage your claim from start to finish – scoping, registering the claim, handling queries from HMRC,and handling the accounting treatment.

We work with you to make the claims process as seamless as possible – simply

put, we will do the work and you will get the benefit.

Doing more for our customers

Working as your most trusted advisor, we are in an ideal position to understand your

business and offer services that can add significant value.

We want to help you to commercialise your innovation, to make sure that innovation is recognised and receives the full credit it is due. Many companies that qualify for R&D tax relief may also have patents or have intellectual property that is patentable. We will be able to identify if this is the case for you and advise on further benefits that might be available to you through Patent Box.

Businesses that invest in developing and exploiting intellectual property should be

rewarded and Patent Box is designed to do exactly that.

This scheme is administered by HMRC and is designed to reward innovative UK

companies that develop and exploit patented inventions. The tax on profits from the

exploitation of patented inventions is reduced to 10%.

Even if the patented element of the product or process is minor, 100% of a company’s

worldwide profits arising from product income should qualify for the 10% Patent Box

corporation tax relief.

For a chat about your business and to see if you qualify for R & D tax credits, get in touch with Purple Accounts today:

01925 979500