23 August 2022
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What does my business need to do to claim R&D tax credits?

Research and development (R&D) tax credits are incentives created by the UK government to reward innovative companies developing new products, processes, or enhancing existing ones, to accelerate their growth.

In this guide we will cover:

  • What are R&D tax credits.
  • What makes your business qualify?
  • Costs that qualify?
  • 3 ways your business can claim R&D tax.
  • 6 steps on how to apply.

What makes your business qualify for R&D tax?

In order to benefit from R&D tax, you must:

  • Have spent money on innovative projects
  • Have carried out qualifying research and development activities
  • Be a limited company in the UK, subject to Corporation Tax.

What costs qualify for R&D tax?

  • Some form of software
  • Freelancers and subcontractors. This may include materials and consumables such as light and power used in order to transform the R&D project and heat.
  • Staffing costs, such as salaries, pensions, and reimbursed expenses
  • Consumable costs

3 ways you can claim

Now that we have covered the basics and you have an idea of what will make your business qualify for R&D tax credits, let’s look at three ways you can claim. All R&D tax credits are administered by HMRC however, it can be a complicated and overwhelming process to dive into. There are many things that can affect your claim

There are three ways in which your business can make claim:

  • Self-prepared claim
  • Use the support of your accountant
  • Go to an R&D Tax specialist (FI Group)

How can your business apply?

Granted, filing a fully compliant R&D tax credits claim can be a complicated process. However, if you get something wrong it can complicate your process even more. Worst case scenario you could face an HMRC inquiry which may delay your R&D tax credit for up to six months. 

This is why making a claim with the support of a specialist not only guarantees your claims to be done correctly, but it can make the whole process smoother. If you are interested in having an R&D specialist by your side, contact us today and find out how we at FI Group can help.

What does my business need to do to claim R&D tax credits?

The six steps to applying:

1. Figure out what projects are you going to claim for

It is recommended to break up your research and development into 3-5 projects. Where each project is made up of eligible activities, and the overall projects are meeting the HMRC definition of R&D. This keeps things simple for HMRC.

FI Group’s specialist consultants are able to identify where you can claim on your projects, saving your time and ensuring you get the maximum return.

2. Figure out what scheme are you applying for

The scheme you apply for depends on the size of your company. Currently, there are two schemes to claim R&D tax claims:

  • Small to Medium-sized Enterprises (SME) tax relief scheme – for smaller to medium-sized companies, with tax relief available up to 33.35%.
  • R&D Expenditure Credit (RDEC) tax relief scheme – for larger companies, with tax relief of 10.53%.

3. Calculate the size of your claim

After that, once you know the scheme appropriate for your claim, it is time to calculate the size of your claim. You can use our calculator to find out how much R&D spend your business can claim back.

To save your time, we have created our own R&D Tax credit calculator that provides you with an accurate estimation of how much you could claim.

4. Write your technical report

The technical report gives you the opportunity to demonstrate exactly what work was undertaken and any challenges your business faced along the way. You can find out how to write a technical report here.

FI Group provides technical report writing for all of our clients, ensuring each report is thorough and up to HMRC standards/

6. Complete your CT600

The CT600 is part of the Company Tax Return. This is where you add the financial calculations into the right boxes for HMRC.

7. File

When all the above steps are complete FI Group files your claim with HMRC.

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Do you feel overwhelmed by it all?

If you feel overwhelmed by the process of a report and would like more clarity or support. Please feel free to contact us and we will help you with any enquires.

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