R&D Tax Credits, Explained
Research & Development Tax Credits are a tax incentive designed to encourage UK companies to invest in R&D. By using R&D Tax Credits, companies can reclaim up to 33% of the costs of their R&D projects.
In effect, R&D Tax Credits allow companies to reduce their corporation tax bill or claim payable cash credits as a proportion of their R&D spend. There are three things you need to consider before making an R&D claim, and they’re all covered below. You can use the buttons below to skip ahead.
To find out about the latest announcements go to R&D News →
Companies with over 500 staff, turnover over €100m, or a balance sheet over €86m, will need to apply using the Research and Development Expenditure Credit (RDEC). For specialist advice on RDEC, Get In Touch →
1. Is Your Business Conducting R&D?
You’d be surprised how much work qualifies. Check out some of the examples and case studies in the section below.
2. What Costs Do R&D Tax Credits Apply To?
How much you’ve spent on staff, subcontractors and other costs, will impact how much you’ll get back. Find out more below.
2. What Costs do R&D Tax Credits Apply To?
How much you’ve spent on staff, subcontractors and other costs, will impact how much you’ll get back. Find out more below.
3. What Reward Are You Entitled To?
You’ll need to show HMRC you’ve conducted R&D, and in return you could claim up to 33% of your costs back, depending on your financial situation.
3. What Reward Are You Entitled To?
You’ll need to show HMRC you’ve conducted R&D, and in return you could claim up to 33% of your costs back, depending on your financial situation.
Are you conducting R&D?
If you’re not sure whether your work qualifies, check out some of the examples and case studies below. Alternatively – book in a free consultation to find out in 15 minutes whether you’ve conducted R&D. Find Out in 15 Minutes →
Could you be conducting R&D without knowing it?
Scroll through to find out what type of projects might apply.
R&D Tax Credit Case Studies
Here are some examples of clients we’ve helped with R&D Tax Credits. Whether you’ve spent £10,000 or £10,000,000 on R&D, we can help you get the benefit you deserve. To see more examples – Case Studies →
What Costs Can You Claim R&D Tax Credits On?
You can’t claim for all of your R&D expenditure. For example – costs that don’t directly relate to the R&D project, such as payroll or accounting, can’t be included. Here are the types of costs you can claim.
For more detail on each of these costs – read this article: R&D Tax Credits – Claimable Costs →
What Costs Can You R&D Tax Credits On?
You can’t claim for all of your R&D expenditure. For example – costs that don’t directly relate to the R&D project, such as payroll or accounting, can’t be included. Here are the types of costs you can claim.
For more detail on each of these costs – read this article: R&D Tax Credits – Claimable Costs →
What Reward Are You Entitled To?
There are two ways of benefiting from the R&D Tax Credit. Either way – you’ll need to ask your accountant to submit or amend your corporation tax return for the year you did your R&D.
1. A reduction or refund in corporation tax
A profit making company can receive up to 25% of its Research & Development costs back, by reducing its corporation tax liability. This amount will reduce to 21% for expenditure from 1/4/2023.
2. A payable tax credit
A loss making company can receive up to 33% of its Research & Development costs back, by surrendering losses related to their trade. This amount will reduce to 19% for expenditure from 1/4/2023 onwards. Alternatively – they could carry their losses forward and benefit from corporation tax reductions in future accounting periods.
If you’ve only paid a modest amount of corporation tax – you could qualify for both of these.
Now to the important part – how much could you get back. Try our calculator to give you an estimate.
What Reward Are You Entitled To?
There are two ways of benefiting from the R&D Tax Credit. Either way – you’ll need to ask your accountant to submit or amend your corporation tax return for the year you did your R&D.
1. A reduction or refund in corporation tax
A profit making company can receive up to 25% of its Research & Development costs back, by reducing its corporation tax liability. This amount will reduce to 21% for expenditure from 1/4/2023.
2. A payable tax credit
A loss making company can receive up to 33% of its Research & Development costs back, by surrendering losses related to their trade. This amount will reduce to 19% for expenditure from 1/4/2023 onwards. Alternatively – they could carry their losses forward and benefit from corporation tax reductions in future accounting periods.
If you’ve only paid a modest amount of corporation tax – you could qualify for both of these.
Now to the important part – how much could you get back. Try our calculator to give you an estimate.
Find Out How Much You Could Claim
Use our calculator to estimate your tax credits.
What is the financial position of your company?
What is your estimated spend on R&D per year?
We estimate you could receive up to
£6,175
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£25,000 x 130% (enhancement rate) = £32,500
x 19% (Corporation Tax rate) = £6,175
£6,175 / £25,000 = 25%
We estimate you could receive up to
£30,875
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£125,000 x 130% (enhancement rate) = £162,500
x 19% (Corporation Tax rate) = £30,875
£30,875 / £125,000 = 25%
We estimate you could receive up to
£61,750
as a tax refund or reduced tax liability.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£250,000 x 130% (enhancement rate) = £325,000
x 19% (Corporation Tax rate) = £61,750
£61,750 / £250,000 = 25%
We estimate you could receive up to
£247,000
as a tax refund or reduced tax liability.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£1,000,000 x 130% (enhancement rate) = £1,300,000
x 19% (Corporation Tax rate) = £247,000
£247,000 / £1,000,000 = 25%
What is your estimated spend on R&D per year?
We estimate you could receive up to
£16,675
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£50,000 x 130% (enhancement rate) = £65,000
£50,000 + £65,000 (enhancement) = £115,000 (enhanced expenditure)
£115,000 x 14.5% (surrender rate) = £16,675
£16,675 / £50,000 = 33.35%
We estimate you could receive up to
£83,375
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£250,000 x 130% (enhancement rate) = £325,000
£250,000 + £325,000 (enhancement) = £575,000 (enhanced expenditure)
£575,000 x 14.5% (surrender rate) = £83,375
£83,375 / £250,000 = 33.35%
We estimate you could receive up to
£166,750
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£500,000 x 130% (enhancement rate) = £650,000
£500,000 + £650,000 (enhancement) = £1,150,000 (enhanced expenditure)
£1,150,000 x 14.5% (surrender rate) = £166,750
£166,750 / £500,000 = 33.35%
We estimate you could receive up to
£333,500
as a tax credit.
To reward businesses for their investment, the government allows you to enhance your qualifying expenditure.
£1,000,000 x 130% (enhancement rate) = £1,300,000
£1,000,000 + £1,300,000 (enhancement) = £2,300,000 (enhanced expenditure)
£2,0,300,000 x 14.5% (surrender rate) = £333,500
£333,500 / £1,000,000 = 33.35%
