Research and development tax relief, also referred to as R&D tax relief, is a scheme implemented by HMRC to encourage businesses to develop new innovations, products or processes or improve current ones on a continual basis.
There is a time limit as well as eligibility criteria that businesses need to meet. At Gravitate Accounting, our tax consultant can advise on how you can leverage from research and development tax relief and assist in the application to claim the most cash back for your business.
The amount of tax relief you can claim on specific research and development projects your business funds depends on the size of your company, with small to medium-sized enterprises being eligible to claim more.
Not only can you claim back cash for every pound you spend on R&D, but you can also claim 300% of any NI contributions liability and PAYE funds you’ve spent over the last three years.
Other funds you can claim back are:
● Subcontractor costs at the rate of 65%.
● Other employee costs.
● Material costs.
You can claim whether or not your company is profiting from your R&D efforts, but the timeframe in which you’ll receive your claim will differ.
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The research and development tax relief incentive encourages businesses to invest funds in developing processes, products, or services, or upgrade new ones. We’ve mentioned that you can claim cash back, but another option is to claim a reduction in the amount of corporate tax you pay. You can make a claim based on previous accounting periods up to two entire years.
Multiple expenses qualify for R&D tax relief, including:
- External and internal staff
- Research and development that you subcontract
- Independent research
We would be happy to go through all of these in more detail during our initial consultation.
The process for making an R&D tax relief claim involves:
- Confirming your eligibility.
- Calculating enhanced expenditure.
- Gathering supportive evidence for the accounting periods you’re applying for.
- Other evidence to support your claim.
When you partner with us, our tax consultant will work with you every step of the way, not only helping you create your claim but ensuring you claim as much as possible back from HMRC.