3 Things To Consider When Making An R&D Tax Credits Claim

As you probably know, anything to do with claiming tax back from HMRC is usually a long-winded and stressful process involving mountains of paperwork. But the last thing you want to do is go through the whole claim procedure only to find that your claim has been unsuccessful.

Unfortunately for some businesses, this is an all too common occurrence. Here are the top 3 things you need to consider when making an R&D tax credits claim. These tips will ensure everything runs smoothly and you aren’t left disappointed.

1) Are you eligible for an R&D Tax Credit claim?

This is clearly the most important factor to consider when assessing the chances of success for any R&D credits claim. If your business activities don’t meet the requirements for R&D, your claim won’t be successful. Make sure your company is doing work that meets the definition of R&D, which could be developing a new product or service or making significant improvements to a product or service that already exists.
Struggling to understand whether you’re eligible? Our eligibility checker will ask you three easy questions that will determine if you can make R&D claims.

2) How much are R&D Tax Credits worth?

Profitable SMEs can reduce the amount of corporation tax they pay on profits for the period, because of an enhanced R&D deduction which reduces their taxable profits. The current R&D Tax Credits rate results in a 26% benefit on R&D expenditure for profit-making SMEs.  Loss-making SMEs can receive a cash rebate from HMRC of up to 33.35% of eligible R&D spend by surrendering tax losses attributable to the eligible R&D expenditure. To help companies understand how much their R&D claim would be worth to their business, we developed a tax credit calculator which will estimate how much you may receive from making an R&D tax claim.

3) Which staff roles can be included in an R&D Tax Credit claim?

It is not uncommon for an R&D team to consist of many individuals from different parts of the business. Your R&D project team may include your R&D Manager, a Lead Developer, Engineers, Project Co-ordinators, CAD Engineers, Quality Control and Testing specialists, and Cost Accountants, as well as members of the senior management team.

For more information on what to consider when making an R&D Tax Credits claim you can visit our website. If you’re an SME and the idea of making an R&D claim seems too complicated, our online R&D claim tool will do a lot of the work for you, making the claim process a lot less stressful.

Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud