Research & Development (R&D) Tax Relief is one of the UK’s most generous corporation tax reliefs but is still widely under-claimed, with thousands of eligible companies missing out on significant tax benefits.
One of the common misconceptions is that R&D only relates to activities that are going to completely revolutionise science and technology. But this is not always the case.
If your company is creating (or even modifying) an existing product, process or service and is overcoming scientific or technological uncertainties in achieving this, then you could potentially be entitled to a claim - even if the project itself is unsuccessful.
R&D Tax Relief is a government initiative that encourages innovation and increased spending on R&D activities by providing a potentially significant corporation tax benefit.
There are two schemes depending on the size of your business. A company would qualify for the SME scheme if:
Any business exceeding the above would fall into the “large company scheme” for R&D purposes. Under this scheme, you could claim up to 10p for every £1 of qualifying expenditure.
For profit-making SMEs there is an average tax benefit of up to 16.5% - and the average claim made under this scheme so far in the year 2022/23 is worth £36,000 in cash. Loss-making SMEs can also benefit by claiming up to 19p for every £1 of qualifying expenditure as a cash payment.
UK businesses that incur expenditure developing new products, processes or services (or even enhancing existing ones) are eligible for R&D tax relief – and this is not limited to any specific sector.
To qualify you must:
Need help with your R&D claims? Watch our video to see how we can help you unlock the benefits today!
R&D claims can be made for the previous two accounting years which are then offset against your profits, potentially leading to a significant repayment in corporation tax. Even if your company is not making a profit, you can still benefit by choosing to sell the loss to HMRC and receive cash back instead.
Timing is critical – you don’t want to be in a situation where you have missed out on a claim because of any time limits. Our R&D team is able to act quickly, so if you think there may be something worth looking into, please get in touch with us on 0121 693 5000
Jerroms is a trading style of both Jerroms Business Solutions Limited 08923059 and Jerroms GCN Limited 08433008.
Registered office for each of these companies is: Lumaneri House, Blythe Gate, Blythe Valley Park, Solihull, B90 8AH