In 2000 the UK government launched R&D Tax credits. Incentivising the investment into research and innovation by organisations in exchange for tax credits by HMRC on expenditure. You could be entitled to 33p on every £1 spent.

 

What are R&D Tax Credits

R&D Tax credits is a corporation tax relief that may reduce your tax bill, or, in some situations you may receive a payable tax credit. R&D takes place when some element of project work within your organisaton is looking to achieve an “advance in overall knowledge or capability in a field of science or technology.” There is a set criteria to meet, we discuss this further down.

Did you know, the average R&D tax claim submitted to HMRC is £109,500.

What counts as R&D

HMRC is very specific in this. HMRC states “a company must be carrying out research and development work in the field of science and technology. This can include new processes, products, or services, making appreciable improvements to existing ones, and the duplication of existing processes, products and services in a new way.” Basically, you need to be able to prove that the R&D work you are doing is aiming to lead to an advancement on the current status. For example, software development, engineering design, construction techniques, bio-energy, cleantech etc.

It’s our job to help you define what aspects of your project work can be claimed for.

What costs can you claim against

The R&D costs that can be claimed against are quite broad, and can range from direct and indirect staff costs, subcontracted R&D costs, software, consumables, prototypes and collaborative working. The main factor in establishing what costs can be claimed against is the submisson of evidence to HMRC supporting the claim.

Understanding what can be claimed against, and extracting supporting evidence is where we excel.

Claims can be submitted back to 2 full financial years.

Show me the money

Use our calculator below to show you how much you could receive through R&D tax credits.

What is the financial position of your company?

  • Profit-making
  • Loss-making

What is your estimated spend on R&D per year?

  • £ 50,000 50K
  • £ 250,000 250K
  • £ 500,000 500K
  • £ 1,000,000 1M

We estimate you could receive up to

£13,000

as a tax refund or reduced tax liability

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

50,000x130% (enhancement rate)=65,000

x20% (corporation tax rate)=£13,000

£13,000 / £50,000 = 26%

We estimate you could receive up to

£65,000

as a tax refund or reduced tax liability

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

250,000x130% (enhancement rate)=325,000

x20% (corporation tax rate)=£65,000

£65,000 / £250,000 = 26%

We estimate you could receive up to

£130,000

as a tax refund or reduced tax liability

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

500,000x130% (enhancement rate)=650,000

x20% (corporation tax rate)=£130,000

£130,000 / £500,000 = 26%

We estimate you could receive up to

£260,000

as a tax refund or reduced tax liability

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

1,000,000x130% (enhancement rate)=1,130,000

x20% (corporation tax rate)=£260,000

£260,000 / £1,000,000 = 26%

We estimate you could receive up to

£16,675

as a tax credit

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

50,000x130% (enhancement rate)
=65,000

£50,000 + £65,000 (enhancement) =£115,000 (enhanced expenditure)

x14,5% (surrender rate)=£16,675

£16,675 / £50,000 = 33,3%

We estimate you could receive up to

£83,375

as a tax credit

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

250,000x130% (enhancement rate)=325,000

£250,000 + £325,000 (enhancement) =£575,000 (enhanced expenditure)

x14,5% (surrender rate)=£83,375

£83,375 / £250,000 = 33.35%

We estimate you could receive up to

£166,750

as a tax credit

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

500,000x130% (enhancement rate)=650,000

£500,000 + £650,000 (enhancement) =£1,150,000 (enhanced expenditure)

x14,5% (surrender rate)=£166,750

£166,750 / £500,000 = 33.35%

We estimate you could receive up to

£333,500

as a tax credit

Click here to show how this example is calculated

To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.

1,000,000x130% (enhancement rate)=1,130,000

£1,000,000 + £1,300,000 (enhancement) £2,300,000 (enhanced expenditure)

x14,5% (surrender rate)=£333,500

£333,500 / £1,000,000 = 33.35%

Frequently Asked Questions

Why can’t I submit a claim myself?

The HMRC R&D Tax Relief scheme is really quite complex, with one big risk involved – HMRC compliance check. If HMRC wants to check on any detail involved within a claim it could open up the potential for numerous details to be checked. Like business expense audits, this risks your organisation being tagged frequently by HMRC. Next Level Business have vast amounts of experience working with clients to develop their claim, not only saving time but also in reducing risk.

Can my accountant make my claim?

The reality is that many accountants are not trained in R&D Tax Relief claims and therefore miss out on the potential opportunities that we have experience with. R&D Tax relief claims require an in-depth business level knowledge rather than a purely financial level, which is where the Next Level Business team are at their most valuable.

Can I claim if my company is loss-making?

A loss-making SME can recoup up to 33.35% of its R&D expenditure through the R& tax relief scheme. This is more so than a profit-making business. As a loss making company, you are more likely to receive the money into your bank account rather than offset against future tax.

What if the project failed?

In their essence, R&D projects are risky ventures that can fail. This does not affect whether the project can be claimed against.

What happens if HMRC investigates my claim?

If an investigation results in a claim being classed as overclaiming there is a potential for HMRC to issue fines to an organisation, in addition to the time spent with HMRC throughout the investigation. We’ve had experience where previous claims have been submitted both overclaiming and underclaiming, both risky to an organisation. In support of all our R&D tax claims, we ensure the evidence for the claim is established and correct.

How can Next Level Business help me?

Our team here at Next Level Business have vast amounts of experience in R&D tax claims, both in maximising the value of potential claims and submitting the claim to HMRC with the supporting evidence. Our R&D Tax Relief service consists of the following:

Full Service: We provide an end to end service from discovery to cash* (assuming your able to make a successful claim)

Simple: Our simple 4 step process starts with a discovery meeting with you and your team

Contingent: Our service fee is contingent, which in plain english means if you don’t make a successful claim there is no fee

Inside Track: For our clients we understand your business and know your numbers so we are best placed to spot potential and maximise your claim

Integrated: For our clients we can integrate this process into your financial year end process so you have a seamless service

Value Add: We can advise on potential upcoming projects or developments you might have and whether they might qualify, we can also advise on tracking relevant costs

Get in touch with our team today to start your R&D Tax Creit journey.