R&D Tax Credits
R&D Tax Credits are a tax incentive from the UK Government designed to encourage companies to invest in R&D.
They can reduce your tax bill or you can claim payable cash credits as a proportion of your R&D expenditure.
We’re here to make the process simple, providing a complete end-to-end service in claiming R&D tax credits on your behalf.
About R&D Tax Credits
If your company carries out research and development then you may be eligible for R&D tax credits, which can reduce your tax bill or increase taxable losses.
If your company makes a loss on qualifying R&D expenditure, you can choose to ‘surrender’ or ‘cash-in’ losses that derive from an HMRC claim. The HMRC will then ‘repay’ the surrendered losses as a cash R&D tax credit, instead of your company having to carry forward a loss. There are different schemes tailored to different business types that maximises your returns.
The SME R&D tax relief scheme is for companies of less than 500 FTE staff that satisfies one of the following conditions: revenue less than €100m or balance sheet assets less than €86m. Under this scheme the rate of R&D tax relief can be as high as 26%. And loss making SMEs have the option to surrender some of their losses for a payable cash credit from HMRC.
The Large Company Scheme is for companies over 500 FTE staff, or with revenue greater than €100m and balance sheet assets greater than €86m. The rate for R&D tax relief for Large Companies is currently 130%.
But we’re here to make it all easier.
Benefits of R&D Tax Credits
The SME scheme has a rate of R&D expenditure tax relief as high as 230%, while the Large Company Scheme has a rate of 130%. This can mean you will be saving a fair amount on your tax bill.
R&D Tax Credits Qualification
A lot more companies are eligible for the UK Government's R&D tax credits scheme to encourage and reward innovation than you might think.
In a nutshell, you must be able to demonstrate to HMRC that the product or service you’re planning to include in your claim is truly innovative and, at a technological level, an advance on what’s currently available in the market.
According to HMRC, R&D for tax purposes is a project (or a component of a larger project), which “seeks to achieve an advance in science or technology [through] the resolution of scientific or technological uncertainty”. Encouragingly, R&D is still deemed to have taken place whether or not the project is actually successful; it’s the “seeking” that counts.
In summary, in HMRC’s eyes, you’re undertaking R&D when you’re: 1) overcoming technological uncertainties; 2) aimed at achieving an advance in technology; 3) which isn’t readily deducible by a competent professional.
If these conditions apply to your project, congratulations! You can claim R&D tax credits on its day-to-day costs and qualifying expenditure, including things like staff, subcontractors, materials, software and utilities.
Costs that qualify as R&D Tax Credits
For businesses within the SME scheme, R&D tax claim enhancement (the enhanced deduction) has increased to 225% of the qualifying R&D expenditure incurred.
Therefore, where an SME brings expenditure of £100,000 on qualifying R&D, it can deduct £225,000 when working out its taxable profit, or loss, for corporation tax purposes. As the £100,000 would already be accounted for in its accounts, the balance of £125,000 would be an additional deduction from its taxable profit and the corporation tax saving would be £25,000 (at a corporation tax rate of 20%). In smaller terms, that’s the equivalent of your company getting 25p from HMRC for every £1 spent on R&D activities.
But recently things have changed again. As of 1 April 2015, the enhanced deduction was further increased to 230% of the qualifying R&D expenditure incurred. This means the additional deduction is therefore increased to £130,000 and the corporation tax saving is also increased to £26,000 (at a corporation tax rate of 20%).
Making an R&D Tax Credit Claim
HMRC’s guidance on claiming R&D tax credits, which runs to several hundred pages, puts most businesses off going it alone. Then there’s the risk of getting it wrong and either under-claiming what you’re entitled to or over-claiming and prompting an HMRC investigation.
Far better to use a specialist – someone who prepares claims day in day out, who keeps abreast of the latest changes in legislation (and HMRC’s interpretation of it) and who has a strong and proactive relationship with those responsible for approving your claim.
As the UK’s leading R&D tax credit specialist, Jumpstart has a proven track record of more than 2,000 successful claims. We know what to claim, how to claim and the many pitfalls to avoid.
And if you don’t ultimately qualify for R&D tax credits, you won’t owe us a thing.
Why choose Jumpstart as your R&D Tax Credits partner
So why us?
Having the best people and processes in the business means that we minimise the demands on your time by doing most of the work on your behalf.
We minimise the complexity of the claim process by relating each of your project activities and expenditures to specific clauses within the tax legislation.
We minimise the risk of either under-claiming what you're entitled to or over-claiming and inviting an HMRC audit, using the experience gained from over 2,000 successful claims. And we maximise both the accuracy and value of your claim.
Ensuring the best results, time after time.
In a nutshell, Jumpstart:
Minimises your time and effort
Minimises the complexity
Minimises the business risk
Maximises your claim accuracy and value