27 September, 2024
At Keith Willis Associates, we are business tax and accounting specialists, trusted by businesses across the East Midlands and beyond. Our team supports businesses with all of their finances, including submitting and filing taxes, and claiming tax credits.
R&D tax credits are a great example of an HMRC incentive, which many businesses are not aware of. Under the R&D tax credit scheme, your business could be eligible to claim tax credits.
To find out more about the scheme, and whether or not your business can make a claim, keep reading. Below, our expert team have shared their handy guide to R&D tax credits.
What are R&D Tax Credits?
R&D tax credits (Research and Development Tax Credits) are an HMRC scheme. They are a government incentive, designed to encourage UK businesses to invest in and inspire innovation.
Under the scheme, the government hopes to promote increased spending on research and development in the UK, and fuel technological advancement.
As such, R&D tax credits are available for companies operating in the UK, who invest in or engage in research and development.
This includes creating or advancing products, processes or services, thereby helping the country to advance in these key areas.
For companies that do qualify, they can claim a percentage of their research and development expenditures as a tax credit, thereby reducing their tax liability.
Not only does this significantly reduce the cost of R&D investments, but it also encourages companies to launch more innovation projects.
What counts as a Research & Development project?
Research and development projects encompass a wide range of projects, which are pursuing advancements in science or technology.
For your project to qualify as R&D for tax credit purposes, it will need to:
Be striving to advance science or technology
Resolve a challenge or point of uncertainty (which existing bodies of knowledge have not resolved)
Follow a process of testing, data analysis and investigation
Seek to innovate, either improving an existing product or service, or creating a new process product or service (in the science or technology fields)
Common examples of qualifying R&D projects include:
Developing a new product, service or process
Improving an existing product, service or process
Creating new software
Designing new technologies
Advancing manufacturing techniques
Implementing pioneering technologies, or adopting automation
Developing new materials or substances
Improving existing materials (e.g. by enhancing their durability)
Developing new techniques that reduce your environmental impact
Examples of projects that don’t typically qualify for R&D tax credit include:
Minor developments to existing products, services or processes
Minor software updates
Standard data collection
Updates that don’t require significant technological developments
Market research
The development of commercial products, which don’t mark a technological advancement
If you are not sure that your project qualifies for tax credits, contact our team and set up an appointment.
Can my business claim R&D Tax Credits?
For your business to be able to claim R&D tax credits, you will need to fulfil the following criteria:
If you are a UK-registered business
If you have invested in qualifying research and development projects
If your business is liable for UK corporation tax
The UK government offers a range of different R&D tax credit schemes. For instance, SMEs can claim R&D tax credit through the specific SME scheme. For larger businesses, you can claim RDEC credit.
If you are unsure which scheme your business is eligible for, Keith Willis Associates are on hand to help.
We provide specialist accounting services for small and medium-sized businesses across any sector. Our team can also provide full corporation tax accounts, including submitting claims for R&D tax credits. To learn more about how we can support your business, don’t hesitate to get in touch.
What qualifies for R&D Tax Credits?
In order to qualify for R&D tax credits specifically, HMRC states that your proposed project(s) must meet these requirements:
Your project(s) must demonstrate the pursuit of scientific or technological innovation
You must be able to prove that the challenge your project(s) seek to overcome cannot be quickly or easily resolved
Your project(s) must be striving towards an advancement in our current knowledge or capabilities (and provide answers which cannot be unlocked through our existing bodies of research)
A specific scientific or technological uncertainty must be being resolved
What costs can be claimed?
If your project meets the requirements outlined above, then you can claim on a number of project costs. These include:
The salaries of your team, including pension contributions
Any reimbursed business expenses from your team
Materials used for research and development
Tools or utilities used for research and development
Software used for research and development
Any subcontractor costs
The costs of any EPWs
The costs of any patents that are developed
To find out more about the costs that can be claimed under this scheme, or to get assistance in submitting your claim, speak to Keith Willis Associates.
Our team can work with your business to advise you on your eligible R&D tax credits, and ensure your R&D tax claims represent the greatest possible tax benefit.
How we can help
Keith Willis Associates are corporation tax specialists, supporting countless businesses across Nottingham, Derby, Leicester and the rest of the East Midlands.
Our skilled team has decades of experience in the field of R&D tax claims. We can work with you to develop comprehensive tax reports, which are fully aligned with all HMRC’s requirements.
We provide taxation services for small and medium-sized businesses, spanning all sectors. With our comprehensive service, delivered by a friendly and experienced team, you can ensure your business receives all of the tax relief that it is entitled to.
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