Specialist Accountant for Research and Development tax credit
The R&D credit (research-and-development tax credit) is an incentive provided by the government to encourage companies to invest their money in research and development. This credit is available to all businesses including start-ups, small and medium size businesses that are willing and able to take on the risk of creating new products or services.
Claim your R&D Tax credit relief by the expert!
Best Tax Accountants For The R&D TAX CREDIT claim
How do I claim?
How we help small businesses claim tax relief for research and development?
Research & Development (or R&D) is the process by which companies gain new knowledge to create, implement, and review new products and services.
Gatwick Accountant can help you navigate this process, will refer you to the expert team responsible for the R&D tax credit claim. Then expert team can help you navigate your business to success as the best Crawley accounting firm. We will refer you to a specialist
To determine if a claim can be made, have a first conversation with you. Give advice about what qualifies for R&D projects and/or what you should do to meet the criteria.
We help you prepare a Technical Justification document that is based on HMRC guidance. After that we do detailed assessment of expenses in order to claim R&D Tax credit claim.
Our expert will review the eligibility of expenses to guide you in determining which costs can be claimed. • If you prefer this route of advance assurance, then provide support in the Application for Advanced Assurance to ensure that your claim is accepted.
We prepare and submit annual corporation tax return Including the claim and supporting documents in the corporation tax return.
Tax credits subject to PAYE cap
Accounting periods that begin after April 1, 2021 are subject to a restriction. A maximum claim payment is £20,000 plus 300% of the company’s PAYE or NIC liabilities for that period.
This cap is exempt for the company that creates or actively manages intellectual property. Also, less than 15% of the company’s total R&D expenditure is spent on work subcontracted or performed by employees of related persons.
What is needed for a successful claim?
Here are the project requirements:
- A project must be developed that focuses on the problem.
- It must be an intention to make an advancement or a breakthrough in science and technology.
- The project must be related to the company’s trade, whether it is an existing one or one that it plans to start.
- The company must explain how it sought to overcome uncertainty surrounding the advancement it seeks to achieve
The Problem description for Research and Development
In order to justify your R&D Tax relief claim,
- The problem cannot be easily solved by professionals in the respective field.
- Even though the process, product, or service is not publicly available or known about, it can still be considered an advance. For example, there are numerous companies that work on electric and driverless vehicles. Each company will be eligible for R&D tax relief.
- This project could be used to research, develop, or improve a process, product, or service.
SME Research and Development Relief
A company is defined as a SME if:
- It employs less than 500 people.
- It has a turnover below EUR 100 m and a balance sheet of less than EUR 86m.
What are Qualifying expenses?
- Employee costs
- Items that can be consumed or transformed
- Contract out R&D costs* (65%).
- Externally-provided workers (65%).
- R&D allowances that allow you to receive full relief on qualifying capital expenditures.
Most frequent questions and answers
The government created R&D tax credits as an incentive program to help UK businesses grow and develop.
It allows up to 33.35% to be recovered by a company as either a reduction in Corporation Tax, or a cash repayment. It is not subject to tax and can be used for many purposes such as investing in new equipment or hiring new employees.
In summary, the incentive scheme allows you to claim back a portion of the money that your company invests in ‘innovation’.
There are no rules regarding industries or size of company. Any company may apply for R&D tax credits.
To be eligible, a company must have undertaken qualifying research and development activities.
According to the UK government, this is the official definition.
Your work must be part of a specific project that advances science or technology. This does not apply to social sciences like economics.
Your trade is also a requirement for projects. This could be an existing trade or one that you have created through R&D. Your work should be clearly explained.
- Looked for an advancement in science and technology.
- overcome uncertainty.
- A professional in the respective field would not be able to solve these problems easily.
There is misconception that Research and development (R&D) is the creation of a brand-new product or process at the completion of the project. Also, it is wrong saying that R&D tax credit relief is only available for successful projects.
Your company is engaged in research and development if it has been involved in a project that aims to advance science or technology.
Technology is a key factor in many SMEs’ success. A claim can be considered valid if there is an improvement made to an existing product, process, or both.
It’s an integral part of many companies’ work, especially when they are developing new products or creating new ones. This often gives them an edge over other companies in their industry. It can be costly affairs, especially if the project does not go as planned. R&D tax credits are a great option.
You could be eligible for R&D tax credits if your company spends money on research and innovation.
It’s absolutely free money! The current relief for SMEs amounts to 230%. This means that your company receives additional £1.30 for each qualifying expenditure it makes.
Each £ 1 spent results in a £ 2.30 deduction from taxable profits.
Loss-making businesses can also claim a repayment tax credit at 14.5%
Let’s say, a company may have a trading loss of £ 50,000. Qualifying R&D expenditures of £ 25,000. The lower of £ 50,000.000 or £35,000 x 230% = £ 57,500 is the surrenderable loss.
Therefore, the tax credit will be 14.5% x £ 57,500 equals £ 8,337.
Two years from the end of an accounting period. This is to comply with the deadline to file corporation tax returns.
A further restriction is expected for accounting periods that begin after the 1st of April 2023. Subcontractors cost will not be eligible for R&D relief if their work is not performed in the UK. These rules will likely prevent companies from bringing forward meaningful claims if they have significant work done by offshoring or outsourcing to subcontractors overseas.