R&D Tax Credits

by Taz Esmailji as Verified Adviser
  • Category:

    R and D Credits
  • Page Author:

    Taz Esmailji
  • Role:

    Tax Specialist
  • Last Updated:

    07 October, 2020

R and D Credits Overview


R&D Tax Credits is a key part of Government strategy to boost innovation and is a highly rewarding scheme which allows UK companies to reduce their Corporation Tax liability and/or receive a cash injection from HMRC. As the definition of R&D for tax purposes is much broader, it’s not simply about doing an R&D claim but moreover exploring all the activities your business undertakes and identifying your eligibility across each business function.

You can recover up to 33% of development costs invested in innovation and advances in products, processes, materials and software development. The average claim value for SME's is £54,000 and significantly more for Large Companies (companies with over 500 full-time staff and either has a turnover of more than €100m or gross assets of more than €86m), in addition to which;

 You can immediately claim back 2 financial years, then each period going forward.
 Companies with taxable losses can claim a cash credit or offset against future profits.

To satisfy the eligibility requirements for R&D Tax Credits, you must:

 Be a UK Limited company and liable to pay Corporation Tax
 Have traded for at least 12 months
 Have carried out qualifying research and development activities
 Have incurred expenditure on those projects
 Have borne the financial risk in the event of project failure

An important aspect of making an R&D Tax Credit claim is establishing all qualifying activities and associated expenditure for the period(s) for which a claim is being made, ensuring that the technical and financial reports are fully aligned with the legislative criteria and detailed information is provided to HMRC in support of the claim being made. This is an area where Innovation Tax can add significant value by carrying out a full independent assessment of the work carried out and ensuring the claim is robust and fully maximised.

Already Claiming R&D Tax Credits?

If you’re already claiming R&D Tax Credits, we may still be able to help. Using our team of technical and taxation specialists, along with our senior management team who each have in excess 8 years’ tax incentives experience, we have found as many as 70% of companies already claiming are not fully maximising their qualifying entitlement; using the expertise from Innovation Tax could ensure you claim the maximum amount available, significantly increasing the benefit you receive.

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