Reasons Why you Should Claim R&D Tax Relief

 At Areande, we are HMRC tax specialist in R&D tax relief. We can help you get a tax reduction or a cash payment on your innovation projects. R&D tax relief will give you extra income which you can spend on developing your innovative projects further and growing your business.

The UK government introduced R&D tax relief in 2000 to encourage businesses to develop their scientific and technological innovation. It’s an incentive for all UK companies to carry out R&D in their industry, allowing them to create or improve products, processes and systems.

R&D tax relief schemes:

SME scheme is for companies with less than 500 staff and a turnover of under €100 million or a balance sheet total under €86 million.

Research and Development Expenditure Credit (RDEC) scheme is for large companies, but can also apply to SMEs and large companies who have been subcontracted to other companies. RDEC tax credit is 13% of your qualifying expenditure as of 1 April 2020.

Early this year, in July 2020, the government announced it wanted to increase public investment in R&D expenditure to £22bn per year by 2024-25. They want to encourage investment in innovative projects which could improve whole industries and benefit everyone.

For your innovative projects, the following qualify for R&D tax relief through Areande:

1. Staff working on R&D projects

·         Permanent employee salaries, wages, class 1 NIC and pension fund contributions

·         Externally provided R&D staff costs paid to an external agency

2. Subcontracted R&D services

·         SME scheme companies can claim for 65% of the payments made to subcontractors

·         RDEC scheme does not allow large companies to claim subcontracted R&D expenditure unless it is directly undertaken by a charity, higher education institute, scientific research or health service organisation, an individual or a partnership of individuals

3. R&D consumables

·         Items such as materials and the portion of water, fuel, and power directly used for R&D projects

4. Software used for R&D

·         Claim any software solely used in R&D

·         And, claim a portion of software partly used in R&D

5. R&D prototypes

·         Design, construction and testing costs

·         However, prototypes built for sale are considered as a production unit and outside of the R&D scheme. If you used R&D to create the prototype, then you can claim for design, modelling and testing costs but not production costs and materials

6. Clinical trial volunteers for R&D

·         Research organisations and pharmaceutical companies can claim for payments made to volunteers taking part in clinical trials

7. Contributions to independent R&D

·         Only large companies can claim R&D tax relief on contributions they make towards funding independent R&D. The R&D must be carried out by the hired company and related to your trade. Contributions must be made to an eligible individual or a partnership of individuals or organisations such as a charity, higher education institute, scientific research or health service

8. Collaborative working in R&D

·         If you are working with other companies on an R&D project, each company can claim relief on the qualifying costs they have incurred

·         If you collaborate with a university or a research institute, only you can claim relief on the qualifying costs

How Areande can help you

An R&D tax claim can be a manual, lengthy process. We take the hassle out, leaving you to focus on developing your R&D projects. We offer a service which is beyond compare and make claiming R&D tax relief simple.

 

If you are not sure if you qualify or have been working on an innovative project and want to claim, talk to us today