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The R&D scheme was set up to motivate UK companies to innovate within science and technology projects by allowing them to claim back R&D relief on their costs. This means if you’ve created something new within your industry, such as a new service or product (including digital innovations), you’re eligible to claim R&D tax relief.

Similarly, if you’ve improved upon a product or service to increase efficiency or to meet new legislative standards, the project would also be eligible for R&D.

A third type of R&D claim that’s lesser known is duplication: if you are able to duplicate an existing product or service for which the process is a trade secret, you may also be eligible for R&D on this project.

Don’t forget that unsuccessful projects can also apply for this relief—even if your project goal wasn’t achieved, you are still eligible for R&D relief under government guidelines.

If your business is charged UK corporation tax and has had an innovative project within the last two finance years you’d like to claim on, you are eligible to apply for R&D.

Even if your project is loss-making, or the project was never fully realised, you can still apply for R&D. As long as research and development took place, you are eligible.

There are two types of R&D relief. If you are a small to medium-sized enterprise with less than 500 employees and a turnover of less than 100 million euros, you can claim SME R&D relief. This allows you to deduct an extra 130% of your qualifying costs from your yearly profit, as well as the normal 100% deduction, to make a total 230% deduction.

The second type is a RDEC claim for large company schemes, which can also be claimed by SMEs and large companies who have been subcontracted to do R&D work by a large company. This is a tax credit of 13% of your qualifying R&D expenditure.

You may receive a combination of these two types in your R&D relief.

The costs you can claim under this expenditure fall into six categories set by HMRC, which typically covers most of your expenditure for a project. These are PAYE costs, subcontractors, externally provided workers, materials and consumables, and clinical trials. From April 1^st 2023, cloud and data costs will also be included under R&D expenditure categories.

We’ll work with you every step of the way to give you the best result possible. We’ve had great success at finding areas our clients didn’t even know could benefit them in a R&D return, and always stuck around to see it through to the response from HMRC. We’ll gather all the information necessary to compile the report, then present it to you with the facts of the R&D project. Nothing is finalised without your approval, but we’re here to guide you with as much of the relevant knowledge possible.

There is a rolling two-year deadline on R&D claims, so it’s best to get in touch sooner rather than later, especially towards the end of a financial year. It can take up to six weeks to prepare your report, and another 28 days for HMRC to process SME claims. For RDEC claims, this process time can often be a little longer, as they are typically more complicated.

You must apply for R&D after the event of the innovative project, though it is also possible to apply for Advance Assurance ahead of a project if you’d like to be assured the R&D claim for a project is secured.