R&D tax relief is an excellent opportunity for UK businesses to receive tax incentives when they invest in research and development. The scheme rewards past R&D spending whilst also encouraging future investment, directly benefiting industry and the UK economy.
Could R&D Tax Credits benefit my business?
If your business invests significant amounts of time, money, and resources in developing or improving products, processes, or services, you might be entitled to receive a generous R&D tax benefit.
At Libcus, we have an expert team dedicated to ensuring our clients receive the maximum repayment possible.
Where eligible, you can file an R&D tax relief claim each year. The benefit is calculated as a percentage of your qualifying expenditure, i.e., how much you have spent on activities considered “R&D for tax purposes” that year. More information regarding the types of activities that qualify for tax relief is provided below.
If your company is profitable, you can use your claim to reduce your company’s tax bill to a greater extent than standard deductions. In the event that your company may be facing losses (i.e., it does not owe any tax for that year), there are still advantages to claiming. You may be given the benefit of additional losses that can be carried over into future tax years, or the losses could be surrendered for an immediate cash benefit – a ‘tax credit’.
Latest HMRC R&D Statistics
Latest changes to R&D Tax Relief
Technological Advance
Resolution of Technical Uncertainty
Irrespective of what industry or sector you are, we can help you identify eligible activities for R&D for tax purposes. From 1 April 2023, the government is extending the scope of qualifying expenditure to include data & cloud computing costs. To find out more please click here.
Staff Costs
Consumables
Subcontractors
Software
Externaly Provided Workers
Clinical Trials
The research and development (R&D) tax credit claim time limit is two years from the end of the accounting period the claim relates to. Before this period ends you must submit a claim for any qualifying expenditure that you’ve identified during that period.
Costs that cannot be claimed for include:
- the production and distribution of goods and services
- capital expenditure
- the cost of land
- the cost of patents and trademarks
- rent or rates
There are no restrictions on the sector or type of business that can qualify provided they meet the claim criteria. The R&D scheme supports any company working on innovative projects. Common sectors with companies already benefiting from the scheme include: Adhesives, Architecture, Construction, Design, Electronics, Engineering, Environmental, Food Manufacturing, Lighting, Medical, Packaging, Plastics, Printing, Software and IT and Textiles.
HMRC aim to make payments within 28 days for SMEs claiming research and development (R&D) tax credits. Corporation Tax repayments can be much quicker, and sometimes come through within a week of your claim being filed.
Unfortunately, it is unlikely you can claim if you are a soletrader. Sole traders do not pay UK Corporation Tax and, as a result, they cannot claim R&D tax credits. R&D tax credits are form of Corporation Tax relief and so — if you’re a sole trader — you’re not registered for UK Corporation Tax and cannot make a claim.
Great news! R&D tax relief can even be claimed on unsuccessful or aborted projects. Provided you have tried to or successfully overcome uncertainty, there’s a strong basis for a claim.
Introduction to R&D Tax Relief
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Dealing with an HMRC enquiry
Are you facing an HMRC R&D tax relief enquiry? Find out how we can help.
Eligible Sectors for R&D Tax Relief
Not sure if your sector could claim R&D tax relief? Find out if you could qualify.