What are R&D Tax Credits?
To put it simply, the Government wants to support UK companies that are willing to push innovation. This does not need to be blue-sky research, HMRC’s definition of R&D encompasses far more than you may realise.
R&D tax credits are a valuable tax incentive created to reward companies who invest in research and development activities. Their goal is to reward past and encourage future R&D spending, benefiting industry and the UK economy.
So what does this mean for your company? If your business invests time, money and resources into developing or improving products, processes or services, you may be entitled to receive a generous R&D tax credit benefit, either in the form of a cash payment or a reduction in your corporation tax bill. And at LimestoneGrey we’re here to help you achieve the maximum repayment possible.
Fuelling your Business Growth
R&D tax credits can play an integral part in your business strategy; fuelling your company’s growth by providing additional capital that can be invested into future projects. This is not a one-off strategy. Depending on eligibility, R&D tax credits can be claimed yearly, providing a stream of cash injections that can be vital for accelerating company growth.
Typically, the R&D tax credit claim process takes between 4-6 weeks from start to submission. HMRC work towards a target of assessing all SME claims within 28 days. This means you could receive a substantial cash payment directly in your bank within 10 weeks.
How Much Can I Claim?
The size of your R&D benefit ultimately depends on how much your company has invested in research and development activities. SME’S can reclaim up to 33p for every £1 spent on research and development activities and large companies can claim up to 11p for every £1 spent. Categories of expenditure that can be included in your tax credit claim are:
You can include the cost of employees used to undertake the research and development activities within your company. Costs you may be able to include are:
- Gross salary
- Employers’ national insurance contributions
- Employers’ pension contributions
- Reimbursed employee expenses
Materials used within your research and development activities can be included in your claim. This may include the cost of raw materials as well as light, heat and water charges.
If you have used any external labor to conduct your research and development activities, such as agency staff, these costs could be reclaimed.
If you have purchased software for your research and development project, the cost of this software could be included.
If you’ve had to subcontract elements of your research and development projects to third parties (such as testing services), that’s okay. Part of these costs could be reclaimed.
If you have had to pay individuals for participation in clinical trials to test new medications or treatments, these costs can be included in your R&D tax credit claim.