Is your business eligible for R&D Tax Relief?

By JS (Jackson Stephen LLP)

03 Feb 2023

Untitled Design12

At JS, our industry-focused technical approach enables us to identify potential R&D activity across the business to successfully make a claim for your company.

1. WHAT IS R&D TAX RELIEF? 

Research and Development (R&D) Tax Relief is one of the UK’s most GENEROUS Tax Reliefs. It is designed to encourage innovation and increase spending on R&D activities for companies operating in the UK. 

However, not all companies are aware that they may be undertaking qualifying R&D activities for tax purposes! 

R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology. The relief enables companies that incur expenditure in developing or improving products, processes, software, or services to receive a corporation tax deduction or cash payment from HMRC. 

The average R&D Tax benefit claim in the UK for SMEs is £57,330 and currently companies can claim R&D Tax Relief for accounting periods ended within the past two years (new advanced notification rules are to be applied from 1 April 2023).

2. WHO IS ELIGIBLE FOR R&D TAX RELIEF?

Any company (irrespective of the industry they are in) may be eligible for R&D Tax Relief. To benefit from R&D Tax incentives, you must:

  • Be a limited company in the UK that is subject to Corporation Tax 
  • Have carried out qualifying research and development activities 
  • Have incurred qualifying costs relating to these projects

3. WHAT QUALIFIES AS R&D ACTIVITIES?

R&D activities relate to projects that are focused on creating a level of improvement or advancement in a field of science or technology.

  • Developing new products, software, or services 
  • Changing or modifying existing products, processes, software or services

These activities must have an element of challenge where the answer or solution is not readily deducible. However, this does not have to be a new innovation to qualify and project success is not a requirement.

4. WHAT COSTS ARE ELIGIBLE FOR R&D TAX RELIEF? 

  • Qualifying costs would include:
  • Employee costs 
  • Externally provided workers 
  • Contracted out R&D 
  • Software Consumable items 
  • Payments to participants of a clinical trial 
  • Utility costs 
  • Data licence (for accounting periods starting on or after 1 April 2023) 
  • Cloud computing services (for accounting periods starting on or after 1 April 2023)

5. TYPES OF SCHEMES 

There are two R&D Tax Reliefs, Small or Medium-sized Enterprise (SME) and R&D Expenditure Credit (RDEC). 

As part of a wider reform, in the Autumn Statement on 17 November 2022, the Chancellor announced changes to be applied from 1 April 2023 to the available tax rates, resulting in: 

SME

  • The additional deduction being reduced from 130% to 86%, resulting in the benefit for SMEs paying Corporation Tax at 19% reducing to 16.3% and for SMEs paying Corporation Tax at 25% reducing to 21.5%

RDEC

  • The rate will increase from 13% to 20% 
  • With the increase in the Corporation Tax rate to 25%, the net benefit will increase from 10.53% to 15%

6. DEVELOPING YOUR R&D STRATEGY

  • During the R&D Tax claim process, our specialist team will analyse the expenditure across the business to carefully identify the qualifying R&D activities and expenditure, whilst developing the best methodology for your business to ensure the maximum benefit.

7. EVIDENCE TO SUPPORT YOUR CLAIM

HMRC state that the burden of proof lies with the claiming company, and therefore evidence to support your claim is key. As part of our service, we will work with you to help you develop your R&D strategy to capture costs and activities in ‘real time’ to support your claim.

If you would like to find out more, speak to one of the tax experts today by emailing us at [email protected]

Latest news

1

HBD secures planning for £37m Lancashire industrial scheme CGI of the site

HBD secures planning for £37m Lancashire industrial scheme

08 Nov 2024

2

Harrison Drury retains place in 'Best Companies to Work For' list John Chesworth

Harrison Drury retains place in 'Best Companies to Work For' list

08 Nov 2024

3

South Ribble animal feed manufacturer eyes export growth after funded business support The Bamford team

South Ribble animal feed manufacturer eyes export growth after funded business support

08 Nov 2024

4

‘Simpler’ council structure is on the cards westminster-london.jpeg

‘Simpler’ council structure is on the cards

07 Nov 2024

5

New strategic partners revealed for Preston Partnership Preston partnership launch

New strategic partners revealed for Preston Partnership

07 Nov 2024

PC PrestonMacan GIF980x120
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
The Lancashire Festival of Business
FOB 315
Exhibitions
30 Jan 2025

The Lancashire Festival of Business

Impact Conferencing, Burnley, BB12 6QP

09:00 - 16:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
11 Jun 2024 - 04 Dec 2024

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 16:30

Skills Bootcamp in Procurement - Cohort 2
Blue-Modern-Land-Travel-Youtube-Thumbnail-2-1024x576.png.png
LBV Hub Seminars
15 Oct 2024 - 17 Dec 2024

Skills Bootcamp in Procurement - Cohort 2

Community & Business Partners CIC, Blackburn, BB2 3UA

09:30 - 13:00

mBITfor transformative leadership and coaching
mBIT coach Practitioner.png.png
LBV Hub Seminars
14 Nov 2024 - 17 Nov 2024

mBITfor transformative leadership and coaching

Unlocking Possibilities training venue, 166 Waterloo Road , Blackpool, FY4 2AF

09:00 - 17:00

The Business Network Central & East Lancashire
LBV Header (14).png.png
LBV Hub Networking
14 Nov 2024 - 14 Nov 2024

The Business Network Central & East Lancashire

Mytton Fold, Blackburn, BB2 7NP

11:30 - 14:15

Avidly Activates UK 2024 - Activate your customer-driven sales and marketing
avidly activates audience having a good time.jpg.jpg
LBV Hub Networking
14 Nov 2024

Avidly Activates UK 2024 - Activate your customer-driven sales and marketing

Everyman Cinema, Holmes Mill, Clitheroe, BB7 1EB

10:00 - 16:00

LBV119 Magazine Launch Event
DSC9389
Networking
20 Nov 2024

LBV119 Magazine Launch Event

Stonyhurst College, Clitheroe, BB7 9PT

16:00 - 18:00

North West HR Employers Forum
CBP-logo LBV.png.png
LBV Hub Seminars
20 Nov 2024 - 20 Nov 2024

North West HR Employers Forum

Wham Stadium, Accrington Stanley, Livingstone Road, Accrington, BB5 5BX

09:00 - 12:00

Live Work Create: Building Community In The Modern World
Live-Work-Create-Building-Community-1024x1024.png.png
LBV Hub Networking
20 Nov 2024

Live Work Create: Building Community In The Modern World

Society1 Coworking Space, Preston, PR1 3LT

18:00 - 20:00

Emergency First Aid at Work
Chamber Logo1.png.png
LBV Hub Seminars
21 Nov 2024

Emergency First Aid at Work

FGH Training, 3rd Floor, Storey House, White Cross Business Park, Lancaster, LA1 4XQ

09:00 - 05:00

Blackburn & Darwen Youth Zone Quiz Returns for 10th Year!
Quiz Pic.jpg.jpg
LBV Hub Fundraisers
21 Nov 2024 - 21 Nov 2024

Blackburn & Darwen Youth Zone Quiz Returns for 10th Year!

Accrington Stanley Football Club, Accrington, BB5 5BX

17:00 - 20:30

SPARK The Apprenticeship Marketplace
UCLanAerialCampus.jpg.jpg
LBV Hub Networking
21 Nov 2024 - 21 Nov 2024

SPARK The Apprenticeship Marketplace

University of Central Lancashire, Preston, PR1 2HE

09:30 - 13:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV118 Online Graphic
Subscribe now

Weekly news bulletin