If you make a claim for R&D tax credits, you can receive a huge sum of money back to your business, simply because you have been working hard and investing in R&D.
Since it was launched in 2000, the government backed scheme has paid out over £34 billion in tax relief and cash credits across more than 470,000 claims. The claims scheme rewards those businesses across all industries including medicine, tech and engineering and rewards companies investing in R&D so that they accelerate and grow – with some companies receiving £50,000, £100,000 or millions in credit.
The scheme essentially refers to qualifying businesses using the claim to receive either a cash payment or a reduction in their corporation tax. For businesses making an R&D claim for the first time, they are able to claim credits for their last two completed accounting periods – so it can be backdated. You can check your eligibility with TechRound below!
TechRound’s partner will process your information in the best way possible so that your business can maximise its chances of receiving a R&D claim and access these funds as quickly as possible. Simply enter in your details below and one of our team will get in touch with you. This process will operate on a no win, no fee basis.
R&D Tax Claim
How To Make a R&D Tax Credit Claim
Step 1 – Fill in the form with TechRound – include as much information as you can about your business and the R&D work that you have done.
Step 2 – We will verify your information – we will contact you for follow up questions and documentation and compile this into the best way possible so that you can receive your claim
Step 3 – Wait to hear back – and in just a few weeks, you will receive contact from our team and if successful, you will receive your R&D tax claim of £50,000, £100,000 or even £1,000,000.
How The Process Works (The Boring Bits)
1) Apply for Advance Assurance (AA)
For businesses applying for R&D tax credits for the first time, it is worth applying for Advance Assurance (AA). This will allow for the claims to bypass any investigations undertaken by the HMRC during your first three accounting periods – meaning that the process is sped up.
2) Calculate qualifying costs
This involves providing a breakdown of eligible costs, such as how much money the business has spent, and in what areas. Doing so will help to validate a business’ R&D claim.
3) Calculate corporation tax relief or ‘enhancement figure’
Now it is time to calculate total tax relief, known as the ‘enhancement figure’.
For the R&D tax credit scheme, this figure is calculated by multiplying your total allowable costs by 130% and then adding that to the original total allowable cost for a combined total of 230%.
For example, if your business’ total allowable costs come to £150,000. This allowable cost total is then multiplied by 130% to reach £195,000.
You will then add the two figures together to reach the ‘enhancement figure’ of £345,000.
4) Submit ‘enhancement figure’ to the HMRC through your company’s tax return
Submit this figure in box 660 on your company’s tax return.
5) Wait for the HMRC to issue the return
HMRC will then review the claim and issue your business with R&D tax credits if you are eligible.
Am I Eligible For a R&D Tax Credit Claim?
Any company in any industry may be eligible for R&D Tax Credits as long as they are liable to pay corporation tax. As such, this does exclude sole traders and partnerships.
In order to be eligible for R&D tax credits, a business must meet the following criteria:
- Liable to pay corporation tax
- A small to medium-sized enterprise business – Less than 500 employees with a turnover of less than £100 million
- Based in the UK (although the business’ R&D activities do not have to take place within the UK)
- Undertaken qualifying R&D activities
What Counts As a Qualifying R&D Activity?
A qualifying R&D activity must pass two tests:
1) There must be a technological advance
The term ‘technological advance’ refers to the work being carried out with the objective to create something new or improve on a product or process that currently exists. This means carrying out R&D to investigate into this, not necessarily producing an outcome.
For instance, the term ‘technological advance’ could refer to a business creating a service that already exists in their industry, but redeveloping the process in a way that has not been done before.
2) There must be a technological uncertainty
The term ‘technological uncertainty’ simply refers to the concept that what a business is trying to achieve is not easily achievable. Essentially, this means the product, service or process your business is wanting to offer is not commonly known amongst industry professionals.
For instance, proving that there is ‘technological uncertainty’ would include explaining how your business’ service will product the correct outcome, but it is not certain on how to achieve this outcome.
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What Industries Can Apply For a R&D Tax Credits?
If a business is in the process of passing the two tests above, then they are likely to be eligible for a R&D tax claim, no matter the industry that they are in. Here is a list of some example industries where businesses have benefitted from the scheme:
- Gaming
- Apparel
- Tech
- Engineering
- Food and drinks
- IT
- Agriculture
- Cosmetics
- Medical
- Chemical
- Packaging
- Software
- Marine
- Insurance
- Digital advertising
- Life sciences
How Much Is An R&D Tax Credit Worth?
The amount of R&D tax credits that a business will receive is dependent on their R&D spend. The calculated ‘enhancement figure’ can help a business to identify what their claim will be worth. While the value of an R&D claim will differ from business to business, it will typically be worth around 25% of the qualifying spend on R&D.
The business must deduct the ‘enhancement figure’ from their R&D spend.
If the business if profit-making, it is likely that their R&D tax claim will translate into a corporation tax reduction.
If the business is loss-making, it is likely that their R&D tax claim will translate into a cash credit.
In some instances, a business may receive a combination of the two.
What Are The Benefits Of An R&D Tax Credit Claim?
- Businesses in any industry can be eligible
- Many costs can qualify
- There is no minimum claim requirement
- Loss-making businesses are able to claim
- Highly accessible source of funding
- Fast access to tax credit
TechRound’s partner will process your information in the best way possible so that your business can maximise its chances of receiving a R&D claim and access these funds as quickly as possible. Simply enter in your details below and one of our team will get in touch with you. This process will operate on a no win, no fee basis.
R&D Tax Claim
Frequently Asked Questions About R&D Tax Credits
How Far Back Can I Claim For R&D Tax Credits?
A business may claim for qualifying expenses made in their last two accounting periods.
Can I Claim for R&D Tax Credits If My Activity Is Not Finished Yet?
Yes, if the activity is ongoing then there is the potential for past, as well as future R&D claims.
Can a Business Claim For Failed R&D Activity?
Yes, a business can claim as the purpose of the scheme is not the outcome. Instead, it is the process and intent.
How Long Will My It Take To Receive My R&D Claim?
If your R&D claim is successful, your business should receive R&D tax credits within a few weeks.
The HMRC aims to deal with 95% of R&D claims within the first 28 days of their receipt.
Is There a Deadline To Submit a R&D Claim?
The deadline to submit a R&D claim for an established business is two years after the end of the accounting period if they have already been taking part in R&D activities.
The post Make a R&D Tax Credit Claim – Check Your Eligibility appeared first on TechRound.