FAQs | Answers to the Most Common R&D Questions

Frequently asked questions

Find the answers to some of the most common questions our clients ask us and links to more information.

About R&D Tax Credits

What work qualifies as R&D?

Any work where a company has made an advance in technical or scientific knowledge in their field is likely to qualify as R&D.

For more information and examples - view this page.

Who can claim R&D tax credits?

Any limited companies that have conducted qualifying work can claim R&D tax relief.

However, there are two schemes:

- the R&D Tax Credit scheme designed for Small and Medium-sized companies

- the Research and Development Expenditure Credit (RDEC) designed for companies with over 500 staff, turnover over €100m, or a balance sheet over €86m.

For specialist help with either scheme - get in touch.

How far back can you claim R&D tax credits?

You can claim R&D tax credits up to 2 years after the end of the accounting period when the R&D took place.

For example, if you conducted R&D in your accounting period ending 31st March 2020, you would need to have made your claim by 31st March 2022.

How much will I get back?

Use our free R&D Tax Credit calculator tool to get an estimate.

The average claim for a small or medium-sized enterprise is over £50,000 for each accounting period they claim.

How are R&D Tax Credits calculated?

If you are a company with fewer than 500 staff and a turnover of less than €100million, you will be eligible to claim from the SME R&D Tax Credit Scheme. The amount you can claim will depend on whether your company is making a profit or loss.

For R&D spend until 1/4/2023:

- A profit-making company can receive up to 25% of its costs back

- A loss-making company it can be up to 33%.

For R&D spend after 1/4/2023:

- A profit-making company can recieve up to 21% of it's costs back

- A loss-making company can recieve up to 19% of it's costs back

To find out more - check out this article.

What if I used a sub-contractor or freelancer for R&D?

If you are a company with fewer than 500 staff and a turnover of less than €100million, your company can generally claim for 65% of the payments made to unconnected parties.

Find out more here.

What if we've recieved grant funding or subsidies for our R&D?

If your R&D has been directly subsidised by grant funding or subsidies, you may not be able to apply for the R&D tax credit scheme, however, you will always be able to apply for the Research and Development Expenditure Credit (RDEC).

RDEC is slightly less generous, but still an important and valuable source of revenue.

What about R&D Intensive SME's

From 1st April 2023 - companies that are loss-making and spending more than 40% of their revenue expenditure on R&D will qualify for higher rates of relief. Overall they could claim a payable tax credit of up to 27% of their R&D expenditure (compared to 19% for non-intensive SME's).

The Claims Process

How long will a claim take?

We aim to complete your R&D tax claim documentation within 2 weeks of our review meeting and receiving the required information from you.

Your claim will then need to be submitted to HMRC. Once submitted, claims are normally paid out within 40 calendar days. However, HMRC has consistently found it challenging to meet this timeline and some claims can take over 100 days at busy times.

To find out more about the claims process - try this page.

How much time will I need to spend on a claim?

When you work with Zest, our goal is to make the claims process as easy as possible for you. Some clients spend less than half a day on their claim, including time for meetings, information gathering, and reviewing their claim documents. But in reality, it will always depend on your scenario and the quality of your records.

For more information on the claims process - try this link.

Will the research and development tax credit be made as a payment to me?

If you are profit making and you are yet to pay your Corporation Tax bill for the period your claiming - you will receive a reduction in your corporation tax bill.

If you are loss making or you have already paid your Corporation Tax bill - you will receive a payable credit from HMRC.

How do Zest charge?

Zest charge with a single, simple and competitive fee which is based on a percentage of your successful R&D tax credit claim. In the unlikely event that HMRC decide to open an enquiry on your claim, we'll defend it at no extra cost.

What records will Zest produce?

We'll create a document that explains what R&D tax scheme your company qualifies for, why the R&D work you do qualifies for relief, and how much cost can legitimately be claimed.

We'll also determine how much you will receive, work with your accountant to submit the claim to HMRC, and support you with chasing HMRC for payment if required.

Will Zest work with my accountant?

Yes - once you've given us your consent to work with your accountant - we can obtain your annual accounts, corporation tax computations and payroll which we will require for your claim. We will also provide guidance for your accountant when they submit your R&D Tax Credit claim.

Can HMRC open an enquiry and will you defend it?

Part of our job is to help you minimize the risk of HMRC opening an enquiry into your R&D tax claim. However, they can't always be avoided.

Where an enquiry is instigated, we will defend it at no extra cost.