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R&D Tax relief

Research and Development Tax Relief – The Ultimate Guide

What is R&D Tax Relief

R&D Tax Relief is a Government incentive which encourages businesses to invest in and develop innovative products. The innovation being sought could relate to a new business process or system, a new material or a new communications device, or an improvement on something which already exists.

HMRC has a set of conditions which they will apply when determining whether your R&D project is eligible for R&D tax relief, which ensures the project aims to achieve a genuine advance or improvement where a solution has not yet been discovered.

R&D Eligibility

Who is Eligible to Claim?

Rental Example

It may surprise you to learn that any limited company, large or small, profitable or non-profitable, who can demonstrate they have carried out “research and development”, may be eligible to claim R&D tax relief. It is a myth that the R&D tax credit scheme is only relevant to science-based sectors. This is simply not the case as eligible R&D work can take place in any sector, providing the criteria are met.

We currently have several of our clients who are going through the process of claiming, with several who have already successfully claimed between £20k and £60k!

Examples of Who Can Qulaify

  • Creating, or experimenting with new materials for use in construction or engineering project
  • Developing new or improved technology into existing buildings
  • Adapting equipment or processes to meeting new regulatory requirements e.g. fire, health & safety, sound and thermal
  • Modifying existing components and fittings into projects
  • Developing new or improved equipment for use in construction
  • Designing and manufacturing a new product
  • Significantly improving an existing manufacturing process
  • Creation or improvement of a product, process or method
  • Testing a prototype
  • Creating an IT solution or an innovative software programme

R&D Process Counts

Counting Towards R&D Tax Relief

Also, it is the process involved in the work that count towards eligibility rather than the end result i.e. if a company creates something that looks identical to an existing product on the market, but it used a new or improved method to make it, it would be able to claim through the scheme.

To get an idea of whether your company qualifies to claim R&D Tax Credits, ask the following questions. If the answer to any of these questions is “yes” then it is probably worth exploring whether your company is eligible.

  1. Have you developed a new or significantly improved product, service or process?
  2. Has your company implemented a project whether the outcome was not certain because of technical constraints?
  3. Has your company implemented a project that had unusual or significantly challenging environments, conditions or configurations?
  4. Do you employ scientists, engineers, architects, software developers or technicians?
  5. Have you developed any software in-house?
  6. Have you subcontracted out any of the above?

If you think you could be eligible to claim, please call Rachel at BKS Accounts, who can help you with your claim.