Businesses are missing out on tax relief

Are you missing a trick when it comes to claiming Research & Development (R&D) Tax Relief? 

What is R&D Relief?

 Research and Development is a Corporation Tax relief that may reduce your company’s tax bill, or in some circumstances, you may receive a tax refund. 

Under the SME scheme, R&D relief allows companies that carry out qualifying R&D projects to deduct and extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, meaning a total deduction of 230%.

What is a qualifying project?

To qualify as an R&D a project must aim to make an advance in science or technology. 

The project may research or develop a new process, product or service or improve on an existing one.

The R&D project must:

• have looked for an advance in science and technology

• had to overcome uncertainty

• tried to overcome this uncertainty

• not be easily worked out by a professional in the field

What is qualifying expenditure?

Employee costs

For staff working on the R&D project, a proportion of their:

• salaries

• wages

• Class 1 National Insurance contributions

• pension fund contributions

Subcontractor costs

For subcontractors, 65% of the relevant costs associated with working on the R&D project. 

Software

Any software licence fees bought for R&D and a reasonable share of the costs for software partly used in your R&D activities.

Consumable items

The relevant proportion of consumable items used up in the R&D. This includes:

• materials

• utilities

How much can you claim? 

Claim values can very significantly based upon the size of the business and the size of the project being undertaken. 

However, the average claim made for our clients is £25,000, based on clients ranging from £200K - £2.5m turnover. 

If you’d like to speak to us to find out if your company can qualify for R&D tax relief and discuss which costs and projects can be utilised, call us on 01772 925 230.