Innovation drives progress, but many businesses overlook a valuable opportunity to reduce their tax liabilities and reinvest in growth. If your company is engaged in developing new products, processes, or services, you may be eligible for R&D tax credits, a government incentive designed to reward innovation.
At Precision Accountants Ltd, every eligible business should benefit from this scheme. Our team of experienced accountants in Sevenoaks is dedicated to helping you navigate the complexities of R&D tax credits and ensure you claim what you’re entitled to. With over 12 years of industry knowledge, we offer a personal touch, providing tailored, one-to-one services to support your business’s success.
Call us today on 01732 387 059 or email to see if your business is missing out on valuable R&D tax relief.
Precision Accountants Ltd makes sure your innovation pays off, maximising R&D tax credits so your business can grow with confidence.
What Are R&D Tax Credits?
R&D tax credits are a UK government incentive designed to encourage companies to invest in research and development. Despite being one of the most generous tax reliefs available, it’s estimated that over £4 billion has been lost to fraud and error in the UK’s R&D tax credits scheme since 2020.
They allow businesses to claim back a percentage of their R&D expenditure, either as a reduction in Corporation Tax or as a cash credit. This relief is available to companies of all sizes and across various sectors, provided they meet specific criteria.
Who Can Claim R&D Tax Credits?
To qualify for R&D tax credits in the UK, your company must:
- Be subject to UK Corporation Tax: Only companies liable for UK Corporation Tax can claim.
- Seek an advance in science or technology: Your project must aim to achieve an advance in a field of science or technology.
- Face scientific or technological uncertainty: The project should involve overcoming uncertainties that a competent professional cannot readily resolve.
- Undertake systematic and planned activities: R&D activities must be planned and executed systematically.
It’s important to note that the project does not need to be successful or completed to qualify. Even if the R&D activities didn’t lead to a breakthrough, the costs incurred may still be eligible for relief.
What Costs Qualify For R&D Tax Credits?
Eligible R&D costs can include:
- Staffing costs: Salaries, NIC, pensions, and other employment costs for staff directly involved in R&D activities.
- Consumables: Materials and utilities consumed or transformed during R&D activities.
- Software: Software used directly in R&D activities.
- Subcontracted R&D: Costs of R&D work subcontracted to external parties.
- Contributions to independent research: Payments made to independent research organisations.
These costs must be directly attributable to R&D activities and properly documented to support your claim.
How Much Can You Claim?
The amount you can claim depends on your company’s size and tax position:
- SME R&D Tax Relief: Small and medium-sized enterprises can claim up to 33% of their eligible R&D expenditure.
- Research and Development Expenditure Credit (RDEC): Large companies and SMEs that don’t qualify for SME relief can claim under RDEC, which provides a taxable credit of 14.5% of eligible R&D expenditure.
These rates are subject to change, so it’s essential to stay informed about the latest developments.
Common Misconceptions About R&D Tax Credits
Many businesses mistakenly believe they don’t qualify for R&D tax credits. Common misconceptions include:
- “Our project wasn’t successful”: Success is not a requirement; the process of attempting to achieve an advance is sufficient.
- “We don’t have a dedicated R&D department”: R&D activities can be undertaken by various departments, not just a specific R&D team.
- “Only high-tech companies can claim”: R&D tax credits are available across various sectors, including manufacturing, construction, and agriculture.
If you’re engaged in developing or improving products, processes, or services, you may be eligible.
The Importance Of Accurate Record-Keeping
Proper documentation is crucial when claiming R&D tax credits. Maintaining detailed records of R&D activities and associated costs will support your claim and help avoid potential issues with HMRC.
How Precision Accountants Ltd Can Help
At Precision Accountants Ltd, we offer comprehensive support for R&D tax credit claims. Our services include:
- Eligibility assessment: Determining if your activities qualify for R&D tax credits.
- Claim preparation: Assisting in compiling the necessary documentation and completing the claim process.
- HMRC liaison: Communicating with HMRC on your behalf to ensure a smooth process.
- Ongoing support: Providing advice and assistance for future claims.
Our team is committed to helping you maximise your R&D tax credit claim and reinvest those savings into your business’s growth.
CONTACT PRECISION ACCOUNTANTS
Conclusion
R&D tax credits in the UK offer a unique opportunity to reduce tax liabilities and reinvest in innovation. If your business develops or improves products, processes, or services, exploring eligibility for this relief is essential.
At Precision Accountants Ltd, we guide you through every step of the process, ensuring your claims are accurate and maximised. Our personal, one-to-one support has helped numerous businesses in Sevenoaks and beyond reclaim funds they didn’t know were available.
Get in touch with our expert team today on 01732 387 059 or at to maximise your R&D tax credits and boost your business growth.
FAQs
Q1: Can a company limited by guarantee claim R&D tax credits?
Yes, companies limited by guarantee can claim R&D tax credits, provided they meet all the standard eligibility criteria.
Q2: What happens if we overclaim R&D tax credits?
HMRC has introduced a disclosure service for companies that have accidentally overclaimed R&D tax credits. It’s essential to correct any errors to avoid potential penalties.
Q3: Are there any recent changes to R&D tax credits?
Yes, there have been recent changes to R&D tax credits. For instance, from April 2023, the credit rate increased to 20%, providing a net cash benefit of 15% at a 25% tax rate for taxpayers.