R&D Tax Relief
WHAT ARE R&D TAX CREDITS?
Research & Development Tax Relief, also known as Tax Credits is an incentive-based initiative spearheaded by the Government for corporates who invest in innovation and are made available for all businesses that want to channel development through research and innovation. This incentive-based program focuses on progression under the leadership of science and technology. Companies are rewarded based on their proactive participation and the incentives derived can from Tax Reliefs acts as a valuable financial cushion for companies to grow and thrive in.
Below Chart explains Principled cycle of R&D Tax Credits
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Investing in Innovation
spending money on innovation will enable you to make R&D tax credit claim
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Receiving R&D Tax Credit
HMRC will reward you either in form of corporation tax reduction or cash payment from HMRC
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Growing Your Business
Accelerate your business by once your business has received first Claim
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Reinvesting in Innovation
Developing new products and services by hiring new staff will encourage companies to grow
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Receiving Larger R&D Tax Credit
Spending More on R&D activities will help develop new competitive advantages & thereby receiving larger tax credit
HOW DOES R&D TAX RELIEF WORK?
Even though this financial scheme aims to help companies prosper by valuing their contribution towards scientific and technological innovations, there are few critical regulations that this scheme follows
Most companies (even the ones who are not aware of it) eligible for R&D Tax Reliefs, regardless of the success of the innovation research. However, in order to claim tax benefits for your R&D project, the company needs to-
- Conduct their research and development based on a thorough and systematic strategy
- Partake in innovative projects with an aim that they need to achieve advancement in the field of science and technology
- Conduct their research and development based on a thorough and systematic strategy
- Partake in innovative projects with an aim that they need to achieve advancement in the field of science and technology
R&D investment costs can be claimed right from the date of project initiation to the date of discovery or project conclusion. However, claims pertaining to production and distribution of goods and services, land costs, capital investment, rent, patent or trademark costs are not included in the R&D Tax Relief. However, you can claim benefits for the following-
Sub-Contractor Costs
You can claim up to 65% of the relevant costs incurred in the nature of payments made to external agencies and subcontractors, provided they have proactively contributed in the research program.
Technological Costs
Any investment on technology to accelerate or facilitate the research and development process can be claimed under this scheme. This includes software licenses, machinery or equipment hires.
Clinical Trail Costs
Based on the nature of your research, you may need volunteers for clinical trails which can be taken into account when claiming benefits for your R&D. For instance, if you’re research involves pharmaceutical aid, claim benefits for payments made to volunteers can be taken into account.
Consumable Costs
Consumable items in the form of utilities or materials used in the research project can be claimed too, but the claims will levy the proportion of usage within the project.
Labour Costs
Employee participation needs to be justified by salaries, overtimes, wages, NICs, Pension fund contributions etc can be taken into account for R&D Tax Relief. Admin, HR, and support staff costs relating to the research
R&D CLAIMING PROCESS
2018
Understanding Your Business
Precision tax-saving strategies are a must for understanding business and that’s where we at Goodhams come in to help you maximize your savings by getting relief.
At Goodhams, our expert team being proactive will start gathering information to know your business activities to form constructive claim.
2018
Complete Assessment using Technical Compliance
Our team of specific sector specialists , perform Complete Assessment step by step keeping in mind technical and regulatory requirements, standards and laws.
We take into account the technological or scientific uncertainties that comes with R&D projects and ensure that R&D initiative is in accordance to the company's existing or present nature of trade.
2018
Identifying your qualifying activities and related costs
At Goodhams, We maximise your claim by identifying areas you are eligible to make a claim.
Our financial counsellors are here to adopt the best possible approach to match your situation & never had a claim amended by HMRC as result of inquiry.
Before finalising and submitting your tax relief return, we share technical report which shows summary of costs you have incurred for R&D purpose and how we have arrived at your total benefits.
2018
Dealing with HMRC on your behalf
HMRC (Her Majesty’s Revenue and Customs) demand a lot of thorough record-keeping of all eligible activities, expenditures, and efforts in case of uncertainties.
Taking everything into account and filing the right returns can be a bit challenging without professional guidance from accounting experts.
The Goodhams team can proactively help consult, support, and guide you through the complex R&D tax relief claim process.
2018
Receiving your R&D tax credit
Once claim is successfully submitted, it usually takes around four to Sixteen Weeks for HMRC to process your claim.
If there is delay in claim process, we follow up with R&D Department to know exact status of delay.
99.4% of our claims result in payment without inquiry.