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

Construction begins on new Civil Service office building in Talbot Gateway Alan McBride Muse Will Town Defence Infrastructure Organisation Jennifer Chard Defence Business Services Cllr Lynn Williams Blackpool Council Garry Bowker Vinci

Construction begins on new Civil Service office building in Talbot Gateway

20 May 2025

2

Skiddle raises over £750,000 for charities Skiddle cheque presentation to Alder Hey Hospital

Skiddle raises over £750,000 for charities

20 May 2025

3

Former Victorian Hotel approved for residential conversion The site

Former Victorian Hotel approved for residential conversion

19 May 2025

4

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing Oliver Webber, Tracy Clavell-Bate and Tim Webber from Barnfield Group with Cllr Phil Riley, second from right, Leader of Blackburn with Darwen Council

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing

19 May 2025

5

Two Cuckoo Gins named winners in The Gin Guide Awards 2025 Mark Long

Two Cuckoo Gins named winners in The Gin Guide Awards 2025

19 May 2025

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
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200pxtrident 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

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

09:00 - 15:30

Preston Freelancer Meet-Up: May
Freelancer Meet-Up May.png.png
LBV Hub Networking
22 May 2025 - 22 May 2025

Preston Freelancer Meet-Up: May

society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Amber River True Bearing quarterly investment seminar
LBV Hub Seminars
22 May 2025 - 22 May 2025

Amber River True Bearing quarterly investment seminar

Cottons Hotel & Spa , Knutsford, WA16 0SU

16:00 - 18:00

The Business Network Central & East Lancashire
LBV Hub Networking
22 May 2025 - 22 May 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Liverpool Business Expo 2025
https---cdn.evbuc.com-images-881365363-4862066883-1-original.20241023-085714.jpeg.jpg
LBV Hub Awards
23 May 2025 - 23 May 2025

Liverpool Business Expo 2025

Aintree Racecourse , Liverpool , L9 5AS

09:00 - 15:00

Advantage: AI – A Workshop for Business Leaders – May 29
Artboard 15.png.png
LBV Hub Seminars
29 May 2025 - 29 May 2025

Advantage: AI – A Workshop for Business Leaders – May 29

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

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 LBV122 Online Graphic
Subscribe now

Weekly news bulletin