Research and development tax relief

Offering a cash benefit of up to 33.5% of total qualifying expenditure, a wide range of companies can claim this very generous tax relief.

What qualifies for research and development (R&D) tax credits?

Often, businesses carry out research and development (R&D) activities without being aware of it. To qualify for research and development tax credits, the project must achieve advances in overall knowledge or capabilities or resolve scientific or technological uncertainties. Whether you are investing in developing a new product, system or process, there is a chance that the capital expenditure you have incurred qualifies for significant tax relief and we can help you take full advantage.

Fundamentally, if a company is carrying out R&D then all costs associated with this process – including associated utility, building, support staff, consumables, prototyping and even external contractor costs are claimable.  There are two schemes, one for small and medium enterprises (SMEs) and another for large firms.  For SMEs that are profitable the benefit could be as much as 25% of the total expenditure and for loss making SMEs this could rise to 33%.  The large company scheme, RDEC (Research and Development Expenditure Credit), offers a less generous 8% cash benefit based on an indicative tax rate of 19%.

Examples:

Profit making SMEs

  • Qualifying R&D expenditure – £500,000
  • £500,000 x 130% (enhancement rate*) = £650,000
  • Total cash saving = £123,500 (based on a corporation tax rate of 19%)

*The enhancement has the effect of multiplying the total qualifying expenditure by a factor of 1.3.

Loss-making SMEs

  • Qualifying R&D expenditure – £500,000
  • £500,000 x 130% (enhancement rate*) = £650,000
  • £500,000 (original expenditure) + £650,000 = £1,150,000 (enhanced expenditure)
  • Total cash back is calculated as £1,150,000 x 14.5% (surrender rate) = £166,750

How we can help

Many companies often do take full advantage of what is a very generous incentive. This is where experience counts. We have advised a wide range of businesses from IT companies, food and drink, construction firms, health and life sciences and traditional manufacturers on the opportunities available. Our ability to identify when and where R&D occurs in your business is what really makes us stand out from the crowd.

How to start the process

We can offer a complimentary consultation to discuss the nature of your business and assess the potential for identifying R&D activities within your company. Once appointed, we employ an effective methodology to ensure that at each stage we maximise the analysis of costs and provide a robust and transparent assessment that meets HMRC guidance.

The service we provide includes the provision of supporting documentation that can expedite the submission process and ensure a successful agreement with HMRC.

Case Study – Research & Development Tax Credits

A major concrete manufacturer and renewable energy company initiated several projects to develop new products, manufacturing techniques and processes. Their accountant suggested that they should consider asking Gateley Capitus to review the planned expenditure to assess whether qualifying research and development activity was occurring. We identified over £1.5m of qualifying expenditure.

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Speak to the team

Chris Bird

Business Development Manager

Specialisms:

  • Enquiry management
  • Relationship management
  • New client development

+44 (0) 121 234 0271

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Whether it’s a current investment project or you would like to discuss a historical review of expenditure, we can help.

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