What are R&D tax credits?
The R&D tax credits serve as governmental incentives formulated
to foster and facilitate R&D activities carried out by businesses
operating within the UK. This initiative by the UK government was
first introduced in 2000 to encourage small and medium-sized
companies to invest more in R&D activities. A separate scheme
known as the Research and Development Expenditure Credit
(RDEC) was introduced in 2002 for large companies. This opens the
window for businesses to stretch the scope of their R&D endeavours
and enhance operations to fuel growth, all while alleviating
concerns about R&D expenditures.
How do tax credits work?
You can apply for R&D tax credits to claim cash refunds from HMRC
or enjoy corporation tax reductions on qualifying R&D expenditures
if your business is engaged in:
The development of new or improved products, processes,
services or even the advancement of existing ones
Overcoming technical challenges or uncertainties to achieve
scientific advancements
Systematic investigation or experimentation throughout the
process
The dynamics of these activities may vary based on the industries
considering the broad horizons of R&D.
What are the qualifying R&D expenditures?
Carrying out R&D activities is evidently associated with expenses
also known as Qualified Research Expenses (QREs) that companies
incur in order to achieve innovations. Most of these costs fall under
the category of R&D expenditures, which include staff PAYE
costs/pension contributions, subcontractors’ costs, consumables,
software purchases, travel costs, and utility bills.
What costs don’t qualify for R&D tax relief?
R&D tax credits are specifically intended to assist companies
engaged in trial and error for innovations and advancements. This
implies that expenses related to the production, distribution, or
creation of goods and services resulting from R&D work cannot be
claimed. Additionally, expenses such as rent, land, and patent
creation are also ineligible for claiming.
Who can claim R&D tax credits?
The legislation governing R&D tax credits has intentionally cast a
wide net, encompassing diverse sectors such as Information
Technology (IT), construction, manufacturing, renewable
energy, engineering, and more. Its broad spectrum ensures that
innovation across various industries can qualify for these credits. In
order to be eligible for the R&D tax credits, you must:
Be any limited company, other than limited liability
partnerships (LLPs) in the UK that is subject to Corporation
Tax
Have carried out qualifying R&D activities
Have spent money on these projects in the UK
It’s important to note that even unfinished or abandoned projects
that meet the criteria can still be eligible for claiming R&D tax
credits.
Don’t let them go to waste — they could still be the source of your
financial stability and future prospects of growth.
Who qualifies for R&D tax credits?
R&D is fueling innovation and growth in almost all industries:
Information Technology (IT) drives advancements in emerging
technologies, manufacturing focuses on cost-effective operations,
construction adopts advanced safety measures, renewable energy
seeks sustainability, engineering delivers reengineered solutions
and so on, making it applicable to these sectors plus many more.
What counts as R&D?
The qualifying activities for R&D vary across industries,
considering the broad scope of possibilities in their respective field.
In order to ascertain eligibility for R&D tax credits, companies need
to follow a four-criteria model, commonly referred to as the four-
part test. This model offers a more precise perspective and helps
determine whether a company qualifies for the tax credits.
What are the four criteria for R&D tax credits?
The four criteria also known as the four-part test evaluate activities
related to the company’s business operations in terms of R&D. To
qualify for R&D tax relief, the activities must be conducted in
accordance with the following criteria:
- Permitted Purpose delineates the R&D activities conducted
with the aim of enhancing the performance, reliability,
quality and functionality of a product or software. - Technological Uncertainty refers to the unpredictable results
that may arise during the development of a product or
software, including the associated processes. - The process of Experimentation indicates the need for a trial-
and-error phase with the intention to overcome technological
uncertainties. - Technological in Nature means that the R&D activities must
fall within the domains of engineering, physical sciences,
biological sciences, or computer science.
Simply put, if your business is involved in developing new or
improved products, processes, services, or advancements,
overcoming technical challenges, and conducting systematic
investigation or experimentation within technological fields, you
maybe eligible to apply for R&D tax credits.
Which R&D tax credit scheme is right for me?
The initiative covers two R&D schemes for claiming R&D tax
credits: the SME Scheme and the RDEC Scheme. The SME Scheme is
designed for companies with less than 500 staff, a turnover under
€100m, and a balance sheet under €86m. Eligible SMEs can deduct
an additional 86% of their qualifying R&D expenditure from their
taxable profit or claim up to 10% of the surrenderable loss as a cash
injection for loss-making businesses.
On the other hand, the RDEC Scheme is used by larger companies or
SMEs that have received grants or subcontracted R&D from a non-
SME. Companies qualifying for the RDEC Scheme can expect to
claim up to 15% of their eligible expenditure provided they have a
staff headcount over 500, a turnover of €100m or more, and at least
€86m or more in gross assets. These schemes offer different
opportunities for businesses to benefit from R&D tax credits based
on their size and specific circumstances.
You can hop into our Knowledge Library to learn more about the
schemes.
What are the rates of R&D tax credit schemes?
The rates of R&D tax credits heavily depend on the specific R&D
scheme and the context of your company. Here are the rates
according to the scheme:
SME Scheme:
Profitable SMEs can benefit from an enhanced deduction of
86% on qualifying R&D expenditure, in addition to the
standard 100% deduction. This means a total deduction of
186%.
Loss-making SMEs can claim a tax credit worth up to 10% of
the surrenderable loss, which can be used to offset against
other taxes or received as a cash payment.
RDEC Scheme:
Eligible companies can receive a tax credit of 20% on their
qualifying R&D expenditure under the RDEC scheme.
Note: These rates are subject to change based on the ever-evolving
legislation by the Government, so it’s advisable to consult with R&D
tax credit specialists for the most up-to-date information on R&D
tax credit rates.
How to calculate R&D tax credits?
There are R&D tax credit calculators available online specifically
designed to simplify the complex process of determining your
eligible tax credits.
With just a few inputs, these calculators swiftly and accurately
evaluate your R&D expenditures and applicable tax incentives. They
eliminate the guesswork of how to calculate R&D tax credits by
providing precise estimates, helping you apply for R&D claims with
confidence and maximising your tax benefits. Try our R&D tax
calculator for free to find out your estimated amount that can be
reclaimed.
How far back can you claim R&D tax credits?
You can reclaim your research tax credits for a period of up to two
years after the end of your accounting period. It is highly
recommended that you include all eligible qualified research
expenses (QREs) that were incurred within the period you are
claiming prior to the conclusion of the two-year window.
What are the benefits of R&D tax relief?
R&D tax credits in the UK offer significant financial benefits to
businesses. The initiative provides a valuable source of funding to
support the R&D initiatives for small and medium-sized
enterprises (SMEs). SMEs can potentially claim a higher tax relief
rate than larger companies. Essentially, R&D tax credits fuel
companies’ financial resources, encouraging increased R&D
activities across industries and ultimately contributing to the
growth of the UK economy.
How can we help maximise your R&D claim?
Our team of experienced R&D tax credit specialists is well-versed in the
ever-evolving governmental regulations, grants, tax incentives, and
funding opportunities available to companies across various industries
within the UK. And to ensure you’re always informed and well compensated
for your claims, Alexander Clifford is here to provide the support and
guidance you need to stay ahead and succeed. We are well-versed in the
R&D claim process, boasting a 100% success rate with HMRC. With our best-
in-class expertise, we can help you accurately and precisely claim R&D tax
credits based on the latest guidelines.
Having second thoughts? Check out our 5-star reviews and personal
recommendations, book a free consultation for tailored advice or start your
R&D claim process with confidence to maximise your potential benefit.
What are R&D tax credits?
The R&D tax credits serve as governmental incentives formulated
to foster and facilitate R&D activities carried out by businesses
operating within the UK. This initiative by the UK government was
first introduced in 2000 to encourage small and medium-sized
companies to invest more in R&D activities. A separate scheme
known as the Research and Development Expenditure Credit
(RDEC) was introduced in 2002 for large companies. This opens the
window for businesses to stretch the scope of their R&D endeavours
and enhance operations to fuel growth, all while alleviating
concerns about R&D expenditures.
How do tax credits work?
You can apply for R&D tax credits to claim cash refunds from HMRC
or enjoy corporation tax reductions on qualifying R&D expenditures
if your business is engaged in:
The development of new or improved products, processes,
services or even the advancement of existing ones
Overcoming technical challenges or uncertainties to achieve
scientific advancements
Systematic investigation or experimentation throughout the
process
The dynamics of these activities may vary based on the industries
considering the broad horizons of R&D.
What are the qualifying R&D expenditures?
Carrying out R&D activities is evidently associated with expenses
also known as Qualified Research Expenses (QREs) that companies
incur in order to achieve innovations. Most of these costs fall under
the category of R&D expenditures, which include staff PAYE
costs/pension contributions, subcontractors’ costs, consumables,
software purchases, travel costs, and utility bills.
What costs don’t qualify for R&D tax relief?
R&D tax credits are specifically intended to assist companies
engaged in trial and error for innovations and advancements. This
implies that expenses related to the production, distribution, or
creation of goods and services resulting from R&D work cannot be
claimed. Additionally, expenses such as rent, land, and patent
creation are also ineligible for claiming.
Who can claim R&D tax credits?
The legislation governing R&D tax credits has intentionally cast a
wide net, encompassing diverse sectors such as Information
Technology (IT), construction, manufacturing, renewable
energy, engineering, and more. Its broad spectrum ensures that
innovation across various industries can qualify for these credits. In
order to be eligible for the R&D tax credits, you must:
Be any limited company, other than limited liability
partnerships (LLPs) in the UK that is subject to Corporation
Tax
Have carried out qualifying R&D activities
Have spent money on these projects in the UK
It’s important to note that even unfinished or abandoned projects
that meet the criteria can still be eligible for claiming R&D tax
credits.
Don’t let them go to waste — they could still be the source of your
financial stability and future prospects of growth.
Who qualifies for R&D tax credits?
R&D is fueling innovation and growth in almost all industries:
Information Technology (IT) drives advancements in emerging
technologies, manufacturing focuses on cost-effective operations,
construction adopts advanced safety measures, renewable energy
seeks sustainability, engineering delivers reengineered solutions
and so on, making it applicable to these sectors plus many more.
What counts as R&D?
The qualifying activities for R&D vary across industries,
considering the broad scope of possibilities in their respective field.
In order to ascertain eligibility for R&D tax credits, companies need
to follow a four-criteria model, commonly referred to as the four-
part test. This model offers a more precise perspective and helps
determine whether a company qualifies for the tax credits.
What are the four criteria for R&D tax credits?
The four criteria also known as the four-part test evaluate activities
related to the company’s business operations in terms of R&D. To
qualify for R&D tax relief, the activities must be conducted in
accordance with the following criteria:
- Permitted Purpose delineates the R&D activities conducted
with the aim of enhancing the performance, reliability,
quality and functionality of a product or software. - Technological Uncertainty refers to the unpredictable results
that may arise during the development of a product or
software, including the associated processes. - The process of Experimentation indicates the need for a trial-
and-error phase with the intention to overcome technological
uncertainties. - Technological in Nature means that the R&D activities must
fall within the domains of engineering, physical sciences,
biological sciences, or computer science.
Simply put, if your business is involved in developing new or
improved products, processes, services, or advancements,
overcoming technical challenges, and conducting systematic
investigation or experimentation within technological fields, you
maybe eligible to apply for R&D tax credits.
Which R&D tax credit scheme is right for me?
The initiative covers two R&D schemes for claiming R&D tax
credits: the SME Scheme and the RDEC Scheme. The SME Scheme is
designed for companies with less than 500 staff, a turnover under
€100m, and a balance sheet under €86m. Eligible SMEs can deduct
an additional 86% of their qualifying R&D expenditure from their
taxable profit or claim up to 10% of the surrenderable loss as a cash
injection for loss-making businesses.
On the other hand, the RDEC Scheme is used by larger companies or
SMEs that have received grants or subcontracted R&D from a non-
SME. Companies qualifying for the RDEC Scheme can expect to
claim up to 15% of their eligible expenditure provided they have a
staff headcount over 500, a turnover of €100m or more, and at least
€86m or more in gross assets. These schemes offer different
opportunities for businesses to benefit from R&D tax credits based
on their size and specific circumstances.
You can hop into our Knowledge Library to learn more about the
schemes.
What are the rates of R&D tax credit schemes?
The rates of R&D tax credits heavily depend on the specific R&D
scheme and the context of your company. Here are the rates
according to the scheme:
SME Scheme:
Profitable SMEs can benefit from an enhanced deduction of
86% on qualifying R&D expenditure, in addition to the
standard 100% deduction. This means a total deduction of
186%.
Loss-making SMEs can claim a tax credit worth up to 10% of
the surrenderable loss, which can be used to offset against
other taxes or received as a cash payment.
RDEC Scheme:
Eligible companies can receive a tax credit of 20% on their
qualifying R&D expenditure under the RDEC scheme.
Note: These rates are subject to change based on the ever-evolving
legislation by the Government, so it’s advisable to consult with R&D
tax credit specialists for the most up-to-date information on R&D
tax credit rates.
How to calculate R&D tax credits?
There are R&D tax credit calculators available online specifically
designed to simplify the complex process of determining your
eligible tax credits.
With just a few inputs, these calculators swiftly and accurately
evaluate your R&D expenditures and applicable tax incentives. They
eliminate the guesswork of how to calculate R&D tax credits by
providing precise estimates, helping you apply for R&D claims with
confidence and maximising your tax benefits. Try our R&D tax
calculator for free to find out your estimated amount that can be
reclaimed.
How far back can you claim R&D tax credits?
You can reclaim your research tax credits for a period of up to two
years after the end of your accounting period. It is highly
recommended that you include all eligible qualified research
expenses (QREs) that were incurred within the period you are
claiming prior to the conclusion of the two-year window.
What are the benefits of R&D tax relief?
R&D tax credits in the UK offer significant financial benefits to
businesses. The initiative provides a valuable source of funding to
support the R&D initiatives for small and medium-sized
enterprises (SMEs). SMEs can potentially claim a higher tax relief
rate than larger companies. Essentially, R&D tax credits fuel
companies’ financial resources, encouraging increased R&D
activities across industries and ultimately contributing to the
growth of the UK economy.
How can we help maximise your R&D claim?
Our team of experienced R&D tax credit specialists is well-versed in the
ever-evolving governmental regulations, grants, tax incentives, and
funding opportunities available to companies across various industries
within the UK. And to ensure you’re always informed and well compensated
for your claims, Alexander Clifford is here to provide the support and
guidance you need to stay ahead and succeed. We are well-versed in the
R&D claim process, boasting a 100% success rate with HMRC. With our best-
in-class expertise, we can help you accurately and precisely claim R&D tax
credits based on the latest guidelines.
Having second thoughts? Check out our 5-star reviews and personal
recommendations, book a free consultation for tailored advice or start your
R&D claim process with confidence to maximise your potential benefit.
What are R&D tax credits?
The R&D tax credits serve as governmental incentives formulated
to foster and facilitate R&D activities carried out by businesses
operating within the UK. This initiative by the UK government was
first introduced in 2000 to encourage small and medium-sized
companies to invest more in R&D activities. A separate scheme
known as the Research and Development Expenditure Credit
(RDEC) was introduced in 2002 for large companies. This opens the
window for businesses to stretch the scope of their R&D endeavours
and enhance operations to fuel growth, all while alleviating
concerns about R&D expenditures.
How do tax credits work?
You can apply for R&D tax credits to claim cash refunds from HMRC
or enjoy corporation tax reductions on qualifying R&D expenditures
if your business is engaged in:
The development of new or improved products, processes,
services or even the advancement of existing ones
Overcoming technical challenges or uncertainties to achieve
scientific advancements
Systematic investigation or experimentation throughout the
process
The dynamics of these activities may vary based on the industries
considering the broad horizons of R&D.
What are the qualifying R&D expenditures?
Carrying out R&D activities is evidently associated with expenses
also known as Qualified Research Expenses (QREs) that companies
incur in order to achieve innovations. Most of these costs fall under
the category of R&D expenditures, which include staff PAYE
costs/pension contributions, subcontractors’ costs, consumables,
software purchases, travel costs, and utility bills.
What costs don’t qualify for R&D tax relief?
R&D tax credits are specifically intended to assist companies
engaged in trial and error for innovations and advancements. This
implies that expenses related to the production, distribution, or
creation of goods and services resulting from R&D work cannot be
claimed. Additionally, expenses such as rent, land, and patent
creation are also ineligible for claiming.
Who can claim R&D tax credits?
The legislation governing R&D tax credits has intentionally cast a
wide net, encompassing diverse sectors such as Information
Technology (IT), construction, manufacturing, renewable
energy, engineering, and more. Its broad spectrum ensures that
innovation across various industries can qualify for these credits. In
order to be eligible for the R&D tax credits, you must:
Be any limited company, other than limited liability
partnerships (LLPs) in the UK that is subject to Corporation
Tax
Have carried out qualifying R&D activities
Have spent money on these projects in the UK
It’s important to note that even unfinished or abandoned projects
that meet the criteria can still be eligible for claiming R&D tax
credits.
Don’t let them go to waste — they could still be the source of your
financial stability and future prospects of growth.
Who qualifies for R&D tax credits?
R&D is fueling innovation and growth in almost all industries:
Information Technology (IT) drives advancements in emerging
technologies, manufacturing focuses on cost-effective operations,
construction adopts advanced safety measures, renewable energy
seeks sustainability, engineering delivers reengineered solutions
and so on, making it applicable to these sectors plus many more.
What counts as R&D?
The qualifying activities for R&D vary across industries,
considering the broad scope of possibilities in their respective field.
In order to ascertain eligibility for R&D tax credits, companies need
to follow a four-criteria model, commonly referred to as the four-
part test. This model offers a more precise perspective and helps
determine whether a company qualifies for the tax credits.
What are the four criteria for R&D tax credits?
The four criteria also known as the four-part test evaluate activities
related to the company’s business operations in terms of R&D. To
qualify for R&D tax relief, the activities must be conducted in
accordance with the following criteria:
- Permitted Purpose delineates the R&D activities conducted
with the aim of enhancing the performance, reliability,
quality and functionality of a product or software. - Technological Uncertainty refers to the unpredictable results
that may arise during the development of a product or
software, including the associated processes. - The process of Experimentation indicates the need for a trial-
and-error phase with the intention to overcome technological
uncertainties. - Technological in Nature means that the R&D activities must
fall within the domains of engineering, physical sciences,
biological sciences, or computer science.
Simply put, if your business is involved in developing new or
improved products, processes, services, or advancements,
overcoming technical challenges, and conducting systematic
investigation or experimentation within technological fields, you
maybe eligible to apply for R&D tax credits.
Which R&D tax credit scheme is right for me?
The initiative covers two R&D schemes for claiming R&D tax
credits: the SME Scheme and the RDEC Scheme. The SME Scheme is
designed for companies with less than 500 staff, a turnover under
€100m, and a balance sheet under €86m. Eligible SMEs can deduct
an additional 86% of their qualifying R&D expenditure from their
taxable profit or claim up to 10% of the surrenderable loss as a cash
injection for loss-making businesses.
On the other hand, the RDEC Scheme is used by larger companies or
SMEs that have received grants or subcontracted R&D from a non-
SME. Companies qualifying for the RDEC Scheme can expect to
claim up to 15% of their eligible expenditure provided they have a
staff headcount over 500, a turnover of €100m or more, and at least
€86m or more in gross assets. These schemes offer different
opportunities for businesses to benefit from R&D tax credits based
on their size and specific circumstances.
You can hop into our Knowledge Library to learn more about the
schemes.
What are the rates of R&D tax credit schemes?
The rates of R&D tax credits heavily depend on the specific R&D
scheme and the context of your company. Here are the rates
according to the scheme:
SME Scheme:
Profitable SMEs can benefit from an enhanced deduction of
86% on qualifying R&D expenditure, in addition to the
standard 100% deduction. This means a total deduction of
186%.
Loss-making SMEs can claim a tax credit worth up to 10% of
the surrenderable loss, which can be used to offset against
other taxes or received as a cash payment.
RDEC Scheme:
Eligible companies can receive a tax credit of 20% on their
qualifying R&D expenditure under the RDEC scheme.
Note: These rates are subject to change based on the ever-evolving
legislation by the Government, so it’s advisable to consult with R&D
tax credit specialists for the most up-to-date information on R&D
tax credit rates.
How to calculate R&D tax credits?
There are R&D tax credit calculators available online specifically
designed to simplify the complex process of determining your
eligible tax credits.
With just a few inputs, these calculators swiftly and accurately
evaluate your R&D expenditures and applicable tax incentives. They
eliminate the guesswork of how to calculate R&D tax credits by
providing precise estimates, helping you apply for R&D claims with
confidence and maximising your tax benefits. Try our R&D tax
calculator for free to find out your estimated amount that can be
reclaimed.
How far back can you claim R&D tax credits?
You can reclaim your research tax credits for a period of up to two
years after the end of your accounting period. It is highly
recommended that you include all eligible qualified research
expenses (QREs) that were incurred within the period you are
claiming prior to the conclusion of the two-year window.
What are the benefits of R&D tax relief?
R&D tax credits in the UK offer significant financial benefits to
businesses. The initiative provides a valuable source of funding to
support the R&D initiatives for small and medium-sized
enterprises (SMEs). SMEs can potentially claim a higher tax relief
rate than larger companies. Essentially, R&D tax credits fuel
companies’ financial resources, encouraging increased R&D
activities across industries and ultimately contributing to the
growth of the UK economy.
How can we help maximise your R&D claim?
Our team of experienced R&D tax credit specialists is well-versed in the
ever-evolving governmental regulations, grants, tax incentives, and
funding opportunities available to companies across various industries
within the UK. And to ensure you’re always informed and well compensated
for your claims, Alexander Clifford is here to provide the support and
guidance you need to stay ahead and succeed. We are well-versed in the
R&D claim process, boasting a 100% success rate with HMRC. With our best-
in-class expertise, we can help you accurately and precisely claim R&D tax
credits based on the latest guidelines.
Having second thoughts? Check out our 5-star reviews and personal
recommendations, book a free consultation for tailored advice or start your
R&D claim process with confidence to maximise your potential benefit.
What are R&D tax credits?
The R&D tax credits serve as governmental incentives formulated
to foster and facilitate R&D activities carried out by businesses
operating within the UK. This initiative by the UK government was
first introduced in 2000 to encourage small and medium-sized
companies to invest more in R&D activities. A separate scheme
known as the Research and Development Expenditure Credit
(RDEC) was introduced in 2002 for large companies. This opens the
window for businesses to stretch the scope of their R&D endeavours
and enhance operations to fuel growth, all while alleviating
concerns about R&D expenditures.
How do tax credits work?
You can apply for R&D tax credits to claim cash refunds from HMRC
or enjoy corporation tax reductions on qualifying R&D expenditures
if your business is engaged in:
The development of new or improved products, processes,
services or even the advancement of existing ones
Overcoming technical challenges or uncertainties to achieve
scientific advancements
Systematic investigation or experimentation throughout the
process
The dynamics of these activities may vary based on the industries
considering the broad horizons of R&D.
What are the qualifying R&D expenditures?
Carrying out R&D activities is evidently associated with expenses
also known as Qualified Research Expenses (QREs) that companies
incur in order to achieve innovations. Most of these costs fall under
the category of R&D expenditures, which include staff PAYE
costs/pension contributions, subcontractors’ costs, consumables,
software purchases, travel costs, and utility bills.
What costs don’t qualify for R&D tax relief?
R&D tax credits are specifically intended to assist companies
engaged in trial and error for innovations and advancements. This
implies that expenses related to the production, distribution, or
creation of goods and services resulting from R&D work cannot be
claimed. Additionally, expenses such as rent, land, and patent
creation are also ineligible for claiming.
Who can claim R&D tax credits?
The legislation governing R&D tax credits has intentionally cast a
wide net, encompassing diverse sectors such as Information
Technology (IT), construction, manufacturing, renewable
energy, engineering, and more. Its broad spectrum ensures that
innovation across various industries can qualify for these credits. In
order to be eligible for the R&D tax credits, you must:
Be any limited company, other than limited liability
partnerships (LLPs) in the UK that is subject to Corporation
Tax
Have carried out qualifying R&D activities
Have spent money on these projects in the UK
It’s important to note that even unfinished or abandoned projects
that meet the criteria can still be eligible for claiming R&D tax
credits.
Don’t let them go to waste — they could still be the source of your
financial stability and future prospects of growth.
Who qualifies for R&D tax credits?
R&D is fueling innovation and growth in almost all industries:
Information Technology (IT) drives advancements in emerging
technologies, manufacturing focuses on cost-effective operations,
construction adopts advanced safety measures, renewable energy
seeks sustainability, engineering delivers reengineered solutions
and so on, making it applicable to these sectors plus many more.
What counts as R&D?
The qualifying activities for R&D vary across industries,
considering the broad scope of possibilities in their respective field.
In order to ascertain eligibility for R&D tax credits, companies need
to follow a four-criteria model, commonly referred to as the four-
part test. This model offers a more precise perspective and helps
determine whether a company qualifies for the tax credits.
What are the four criteria for R&D tax credits?
The four criteria also known as the four-part test evaluate activities
related to the company’s business operations in terms of R&D. To
qualify for R&D tax relief, the activities must be conducted in
accordance with the following criteria:
- Permitted Purpose delineates the R&D activities conducted
with the aim of enhancing the performance, reliability,
quality and functionality of a product or software. - Technological Uncertainty refers to the unpredictable results
that may arise during the development of a product or
software, including the associated processes. - The process of Experimentation indicates the need for a trial-
and-error phase with the intention to overcome technological
uncertainties. - Technological in Nature means that the R&D activities must
fall within the domains of engineering, physical sciences,
biological sciences, or computer science.
Simply put, if your business is involved in developing new or
improved products, processes, services, or advancements,
overcoming technical challenges, and conducting systematic
investigation or experimentation within technological fields, you
maybe eligible to apply for R&D tax credits.
Which R&D tax credit scheme is right for me?
The initiative covers two R&D schemes for claiming R&D tax
credits: the SME Scheme and the RDEC Scheme. The SME Scheme is
designed for companies with less than 500 staff, a turnover under
€100m, and a balance sheet under €86m. Eligible SMEs can deduct
an additional 86% of their qualifying R&D expenditure from their
taxable profit or claim up to 10% of the surrenderable loss as a cash
injection for loss-making businesses.
On the other hand, the RDEC Scheme is used by larger companies or
SMEs that have received grants or subcontracted R&D from a non-
SME. Companies qualifying for the RDEC Scheme can expect to
claim up to 15% of their eligible expenditure provided they have a
staff headcount over 500, a turnover of €100m or more, and at least
€86m or more in gross assets. These schemes offer different
opportunities for businesses to benefit from R&D tax credits based
on their size and specific circumstances.
You can hop into our Knowledge Library to learn more about the
schemes.
What are the rates of R&D tax credit schemes?
The rates of R&D tax credits heavily depend on the specific R&D
scheme and the context of your company. Here are the rates
according to the scheme:
SME Scheme:
Profitable SMEs can benefit from an enhanced deduction of
86% on qualifying R&D expenditure, in addition to the
standard 100% deduction. This means a total deduction of
186%.
Loss-making SMEs can claim a tax credit worth up to 10% of
the surrenderable loss, which can be used to offset against
other taxes or received as a cash payment.
RDEC Scheme:
Eligible companies can receive a tax credit of 20% on their
qualifying R&D expenditure under the RDEC scheme.
Note: These rates are subject to change based on the ever-evolving
legislation by the Government, so it’s advisable to consult with R&D
tax credit specialists for the most up-to-date information on R&D
tax credit rates.
How to calculate R&D tax credits?
There are R&D tax credit calculators available online specifically
designed to simplify the complex process of determining your
eligible tax credits.
With just a few inputs, these calculators swiftly and accurately
evaluate your R&D expenditures and applicable tax incentives. They
eliminate the guesswork of how to calculate R&D tax credits by
providing precise estimates, helping you apply for R&D claims with
confidence and maximising your tax benefits. Try our R&D tax
calculator for free to find out your estimated amount that can be
reclaimed.
How far back can you claim R&D tax credits?
You can reclaim your research tax credits for a period of up to two
years after the end of your accounting period. It is highly
recommended that you include all eligible qualified research
expenses (QREs) that were incurred within the period you are
claiming prior to the conclusion of the two-year window.
What are the benefits of R&D tax relief?
R&D tax credits in the UK offer significant financial benefits to
businesses. The initiative provides a valuable source of funding to
support the R&D initiatives for small and medium-sized
enterprises (SMEs). SMEs can potentially claim a higher tax relief
rate than larger companies. Essentially, R&D tax credits fuel
companies’ financial resources, encouraging increased R&D
activities across industries and ultimately contributing to the
growth of the UK economy.
How can we help maximise your R&D claim?
Our team of experienced R&D tax credit specialists is well-versed in the
ever-evolving governmental regulations, grants, tax incentives, and
funding opportunities available to companies across various industries
within the UK. And to ensure you’re always informed and well compensated
for your claims, Alexander Clifford is here to provide the support and
guidance you need to stay ahead and succeed. We are well-versed in the
R&D claim process, boasting a 100% success rate with HMRC. With our best-
in-class expertise, we can help you accurately and precisely claim R&D tax
credits based on the latest guidelines.
Having second thoughts? Check out our 5-star reviews and personal
recommendations, book a free consultation for tailored advice or start your
R&D claim process with confidence to maximise your potential benefit.
