Research and Development (R&D) Tax Credits are a form of tax relief for companies that invest in innovation.
We often get asked how a company can claim Research and Development Tax Credits, and whether they are eligible or not.
Companies that incur costs when improving or developing new products, processes, or services could be eligible to claim. To make a claim, you need to demonstrate that your company has carried out qualifying R&D activities and incurred relevant costs such as staff, materials, software, and subcontracted R&D used in your R&D projects.
You must be able to demonstrate that a scientific or technological uncertainty existed, and your project must create an advance in that field of science or technology overall, not just for your business.
A successful claim could mean a reduction in a corporation tax bill, or even a cash payment from HMRC, and rewards can be significant.
We have found that many companies are unaware that they qualify and that claims can even be made on unsuccessful projects.
Here are some tips to keep in mind when making a claim:
- Keep detailed records of all your R&D activities and costs, including staff time, materials, and software.
- Make sure that your R&D activities meet the definition of “scientific or technological innovation” as set out by HMRC.
- R&D relief is claimed through the company’s Corporation Tax Return for the period to which the expenditure relates.
- The deadline for submission of the claim is two years following the end of the accounting period in which the costs were incurred. However, for accounting periods starting on or after 1 April 2023, a claim notification will be required within 6 months after the year end, to allow a claim to be made.
The R&D legislation has gone through substantial changes over the last few years and as the eligibility criteria for R&D tax credits can be complex, it’s important to seek professional advice from an experienced R&D tax credit specialist who can help you navigate the application process and maximise your eligible relief.
Our team specialises in claiming R&D tax credits and has up-to-date knowledge to assist with your application.