Claim Tax Back from HMRC for Research & Development in Your Company

Home/Uncategorized/Claim Tax Back from HMRC for Research & Development in Your Company

Claim Tax Back from HMRC for Research & Development in Your Company

To encourage companies to invest in research and development, the government offers additional tax reliefs on the expenditure.  

This claim is applicable for the businesses that seek to research or develop an advance in their field. R&D credits are a corporation tax relief. It can be claimed even for unsuccessful projects.

SME R&D 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

The rules for claiming R&D tax relief are very generous and from a tax point of view many business activities can qualify for relief rather than just those involved in very specific scientific type research.

The tax relief can be claimed up to 2 years after the end of the accounting period it relates to.

Qualifying R&D certain conditions have to be met in relation to the expenditure:

The following as examples of research activities:

• activities with the aim of obtaining new knowledge;

• searching for, evaluating and selecting applications of research findings and other knowledge;

 • searching for alternatives for materials, devices, products, processes, systems or services;

 • formulating, designing, evaluating and selecting such possible alternatives. Further detail is provided in the guidelines which state that:

• The activities which directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D. Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place.

Costs that can be claimed.

Costs can be claimed on the project from the start working date on the uncertainty until it is developed or discovered the advance, or the project is stopped.

a. Staff costs;

b. software or consumables;

c. relevant payments to the subjects of clinical trials;

d. subcontracted R & D costs; or e. externally provided workers.

Advance Assurance

Small companies that haven’t claimed R&D before can be qualified for Advance Assurance. This allows small companies to be able to be sure they can claim R&D tax credits before embarking on significant expenditure. Once accepted, HMRC will allow claims without further enquiries for the first 3 accounting periods of claiming R&D relief.

For more information regarding R&D claim, please send your request to sales@sterling-beanland.co.uk.

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