Frequently Asked Questions

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths. The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D. To get R&D relief you need to explain how a project:

• looked for an advance in science and technology
• had to overcome uncertainty
• tried to overcome this uncertainty
• could not be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.

• Staff costs. You can claim the salaries of staff directly involved with the R&D project
• Consumable items
• Software
• Prototypes
• Externally Provided Workers (EPWs)
• Subcontractors
• Research Contributions
• Clinical Trial Volunteer Costs

Costs that cannot be claimed for include:

• the production and distribution of goods and services
• capital expenditure
• the cost of land
• the cost of patents and trademarks
• rent or rates

Yes, large companies can claim a Research and Development Expenditure Credit (RDEC) for working on R&D projects.

RDEC replaced the large company scheme in April 2016.

RDEC can also be claimed by small and medium-sized enterprises (SMEs) who have been subcontracted to do R&D work by a large company or who have received a grant or subsidy for their R&D project.

The SME R&D tax relief scheme allows you to deduct an extra 130% of qualifying costs from your yearly profits, as well as your normal 100% deduction, totaling 230%. If your company is making a loss, you can claim a tax credit worth up to 14.5% of the surrenderable loss.

Large companies can claim a Research and Development Expenditure Credit (RDEC) for working on R&D projects. The RDEC is a tax credit, and is 13% of your qualifying R&D expenditure.

R&D is a Corporation Tax (CT) tax relief that may reduce your company’s tax bill if your company is liable for CT or, in some circumstances, you may receive a payable tax credit.

You can claim SME R&D tax relief if you’re a company with:

• less than 500 staff
• a turnover of under 100 million euros or a balance sheet total under 86 million euros

You may need to include linked companies and partnerships when you work out if you’re a SME.

Unfortunately, it is unlikely you can claim if you are a soletrader. Sole traders do not pay UK Corporation Tax and, as a result, they cannot claim R&D tax credits. R&D tax credits are form of Corporation Tax relief and so — if you’re a sole trader — you’re not registered for UK Corporation Tax and cannot make a claim.

Great news! R&D tax relief can even be claimed on unsuccessful or aborted projects. Provided you have tried to or successfully overcome uncertainty, there’s a strong basis for a claim. 

No, capitalised cost do not qualify. However, development costs that have been capitalised under intangible assets can be included.

If you have any questions about your claim and the possible inclusion of capitalised expenditure, please contact one of our technical experts.

Our techical specialists do all the work that goes into claiming R&D tax credits so that you don’t have to. We know your time is precious, so in asking the right questions to assess your eligibility to claim, we make the process as easy as possible.

We would love to find out more about your business and how we might be able to help you compile a Research and Development tax claim. Please contact us today to book a consultation with our team.