Gerry Surtees Chartered Tax Adviser

Ready for a cash injection from HMRC?

When it comes to financing your business growth, probably the last organisation you’d think of to help would be HMRC. But here’s where HMRC can help. R&D tax reliefs for limited companies, designed to encourage and reward research and development in the UK, can offer some great tax savings, and effectively help you fund your investment in developing new products or processes.

For a start, what is R&D relief?

SME’s can get a 230% deduction for qualifying R&D costs. 

To put that simply, a normal claimable business expense is 100% tax deductible (for example you spend £10,000 on advertising – this reduces profits by £10,000 and reduces your tax bill by £2,000 (at current corporation tax rates)).

For qualifying R&D costs though, you get a 230% deduction!  That means if you spend £10,000 on R&D, this reduces your tax bill by £4,600.

OK, sounds good, so what qualifies for R&D?

The good news is, a lot of businesses are doing research and development without really realising they’re doing it.

It’s all about R&D projects.  If you can prove that you’re working on a project which qualifies for R&D, then you’re well on the way to making an R&D claim.

For a project to qualify, it must involve some sort of technological (or scientific) advancement – this can include creating new processes, products or services, or making improvements to existing ones.  It is a bit more than just sourcing a new product for your firm, it is really trying to develop something new or improve what’s already out there through an advancement.

How do I know if what we're doing qualifies?

Contact Us to Get the R&D checklist which outlines the key initial questions you need to ask yourself to give you can idea of whether you are doing R&D or not.

I'm sold on R&D tax reliefs!  I want to take advantage of this tax relief - what do I have to do?

R&D relief is claimed on your limited company tax return.  We would always recommend speaking to a professional to establish whether what you are doing qualifies, and in view of maximising your claim.  If you’ve been undertaking R&D activities for a while but not claimed anything yet, you can backdate a claim up to two years.

Please note This report is provided for information only. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this report can be accepted..