R&D

Tax incentives for Research & Development

The government actively encourages businesses to carry out Research & Development (R&D) activities with a range of tax incentives. The incentives are only available to companies and include:

• higher deductions for R&D revenue spending

• an R&D tax credit payable to companies not in profit.

R&D tax credits allow you to offset all the costs associated with R&D activity against your tax bill – and also receive a lump sum as well. RfM has helped clients to claim over £1.25 million in R&D tax credits. With an average £11k saving per client, this could provide a generous income boost for your business.

As a result of recent changes to the scheme, the R&D tax credit available has increased, but many businesses are still unsure of how it works. If you expect to carry out R&D activity in the future, we can help you identify eligible spending and claim R&D tax relief.

How do you define Research & Development?

The activity can be classed as R&D if:

• a project seeks to achieve an advance in overall knowledge or capability

• the activity results in new or enhanced products or processes, and involves an advance in science or technology by resolving a scientific or technological uncertainty.

The project must relate to what the business does, or intends to start doing.

The project must not just be commercially innovative; there must be an advance in science or technology, but it can lead to a competitive advantage.

What costs are eligible for R&D tax relief?

Costs that generally qualify for R&D tax relief include:

• staff costs

• materials

• utilities

• software

• subcontracted R&D.

There are exceptions to the above and it must be proven that the costs have been incurred directly as part of the project.

Supporting clients to innovate

We have successfully made claims for businesses carrying out R&D activity across a wide range of business sectors, including:

• Software

• Engineering

• Pharmaceuticals

• Chemicals

• Leisure

• Retail

• Food and beverage.

The practical application of R&D is broad but we have found that many businesses do not realise they have incurred costs that are eligible. We can review your expenditure and advise whether you can make a claim for R&D tax credits. We can also help identify missed opportunities, maximise claims and prepare draft reports to HMRC.