Research and Development (R&D) tax relief is a government incentive aimed at encouraging innovation and rewarding companies that invest in it.
HMRC defines R&D as activities involving the creation, modification, or improvement of a product or service, or solving problems without existing solutions. The work should aim to advance the field of science and technology.
Introduced in 2000, R&D tax credits offer financial support to eligible companies, helping them grow their teams and further their research and development efforts through refunds, corporation tax reductions, or cash payments.
The team at PSS are experienced in understanding the qualifying criteria for companies wanting to undertake an R&D claim, ensuring compliant claims are made and helping businesses understand the process involved
Contact us for a complimentary audit of your R&D tax status and start saving today.
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A conversation to understand if you are eligible for R&D tax relief.
Collection of technical information to support your claim.
Technical analysis to determine how the claim meets the criteria outlined in the DSIT guidelines.
Finalised package to be submitted to HMRC - this will include the technical and financial aspects of the R&D tax claim and filing of additional information form by PSS (AIF).
HMRC’s stated aim is to pay 85% of payable tax credits within 90 days.
To benefit from R&D tax incentives, you must:
R&D can take place in any sector. It occurs in everything from classic car restoration to engineering, and construction to software development.
The government’s R&D criteria are purposefully broad. Whatever size or sector, if your company is taking a risk by attempting to ‘resolve scientific or technological uncertainties’ then you may be carrying out qualifying activity. This could include:
If you’re not sure if your project is possible, or you don’t know how to achieve it in practice, you could be resolving technological uncertainties and be carrying out qualifying R&D.
What incentive you use to make an R&D tax credit claim will largely depend on whether you are an SME or a large company.
SME:
Fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups, fall into this category.
Large company:
500 staff or more and either more than €100 million turnover or €86 million gross assets.
If you are classed as an SME for R&D tax credit purposes, your next step will be to make a claim via the SME R&D tax incentive. And if you are a large company, via the Research and Development Expenditure Credit (RDEC).
However, there are a few factors such as grants and subcontracting that can restrict an SME from accessing the SME incentive. This means you may need to make a claim via RDEC – or via both incentives.
We help SMEs across all sectors receive millions of pounds every month to re-invest back into their businesses. It is possible to make use of R&D tax credits and grant funding together by using both incentives to ensure maximum value.
R&D tax credits are calculated based on your R&D spend. To make an R&D credit calculation, you need to identify qualifying expenditure and enhance it by the relevant rate (see below). This produces your ‘enhanced expenditure’.
When you deduct your enhanced expenditure from your taxable profits, or add it to your loss, it will result in:
SMEs are able to claim up to 33p for every £1 spent on qualifying R&D activities. The average claim made by SMEs in the UK is £57,228 (2018-19).
Large companies are able to claim up to 11p for every £1 spent on qualifying R&D activities. The average large company (RDEC) claim in the UK is £632,931 (2018-19).
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The clear presentation of services, transparent pricing details, and accessible contact information make it easy for users to understand the offerings and get in touch. The inclusion of client testimonials or case studies adds credibility and reassurance, showcasing the positive impact of the accounting services provided.