Research & Development Tax Credit Relief Accountant
Research and development (R&D) tax credits are a tax relief scheme backed by HMRC and the UK Government to support businesses who devote time and resources to making advances within their respective fields.
The scheme offers vital support in the form of a reduced tax bill or an equivalent cash payment* in order to reward innovation and inspire businesses to continue to develop their operations.
* Subject to HMRC guidelines
The scheme is considered one of the top incentives for undertaking R&D by businesses in the UK, with billions in tax relief claimed each year by innovative businesses. The scheme is open to any size business working in any sector, but claimants must adhere to a strict set of guidelines regarding eligibility, what can be claimed and what costs can be offset.
As such, the process is rigorous and it’s vital to approach your claim with as much information and understanding as possible. The Cutts & Co team are ready to help any business looking to make a R&D credit claim.
As of April 2023, changes to the way R&D Tax Credits will be brought in. The Government will implement new measures to ensure the relief is kept in-line with demands. It’s vital that businesses are aware of these reforms as they may affect your claims and could result in lengthy delays to your funding or enquiries into your claims.
The key changes brought in across 2023 are:
- Qualifying expenditure now includes cloud computing software and data set costs.
- A decrease in SME relief rates.
- An increase in RDEC relief rates.
- As of August 2023, claims will require much more information about your projects (Additional Information Form or AIF).
It’s important to assess how these new measurements may impact your business. In fact failure to comply may well mean your claim is outright rejected or a time-consuming enquiry opened. These can delay any funding you may be eligible for and potentially damage your relationship with HMRC.
You can find the updated measures in our R&D Tax Credit quick guide below, however if you are interested in a more detailed explanation on the impact these reforms could have, do not not hesitate to get in touch.
If you are looking for guidance around what the scheme is or want support to make a claim, Cutts & Co specialise in helping businesses maximise their claims. We pride ourselves on our experience with the scheme, and our clients profit from our knowledge and working relationship with HMRC.
We help secure tax credits for many businesses, and you can learn more about specialist sectors we serve here:
We work to make things simple for our clients, replacing the jargon and complex calculations with easy to follow and effective advice. You’ll get a complete view of what you can claim and what costs can be covered, so even before you claim you’ll understand how your business can benefit.
Put simply, R&D tax credits are an incentive paid out to businesses for qualifying R&D projects and often act as a key source of income for many businesses.
The reward for businesses can be accessed either as a tax bill reduction or for loss making companies, a cash payout. It consists of two schemes – one for smaller businesses, SME R&D Relief, and one for larger businesses, RDEC.
HMRC applies stringent rules for eligibility and what costs can be covered, although many businesses could be missing out on credits.
Whilst it’s important you find an accountant who can provide the services you want, if you are switching from an existing arrangement, we will work to make switching as easy as possible to ease what can be a disruptive time.
You’ll need to make sure you consider a few key areas when you decide to switch accountants to ensure the process is as smooth as possible.
R&D tax credits are open to any business, regardless of the sector you work in or if you do not typically undertake R&D projects. The business must be a limited company, have undertaken qualifying R&D projects and have spent money on those projects.
For businesses applying for SME Relief:
- A SME with fewer than 500 staff
- And either less than €100m total turnover or less than €86m gross
Other businesses who fall outside of these guidelines might claim for Research & Development Expenditure Credits (RDEC). These credits have replaced the large company scheme, and may be claimed by SMEs who have completed work whilst contracted to a larger company.
The range of costs you’ll be able to claim against are also fairly broad, and include*:
- Staff costs, including salaries, NI contributions and pension contributions
- Subcontractor and freelancer costs
- Costs of software related to your project
- Costs of materials and utilities used in the R&D process
- Clinical trial payments in the pharmaceutical industry
*All qualifying costs subject to HMRC standards
For SMEs applying for SME Relief:
- An extra 86% deduction of qualifying costs
- If loss making, 10% of the surrenderable loss as a tax credit
For businesses applying for RDEC:
- 20% of you R&D costs as a tax deduction