R&D Tax Relief

If you’re looking for advice on R&D Tax Relief, you need experts you can trust

If your business invests in research and development to advance science or technology, you may be able to claim R&D Tax Relief on the cost of your R&D activities.

R&D Tax Relief explained

R&D Tax Relief is a government initiative designed to incentivise innovation by providing UK companies with a mechanism for recouping some of the cost of their R&D investment as a tax saving or tax credit.

Although it’s been around since 2000, the schemes have changed numerous times over the years, none more so than recently following HMRC’s increased push for compliance from late 2022 onwards. 

The scheme that’s in place now is called the “merged” scheme, meaning whatever size your company is the relief operates in the same way. Gone are the days of an SME scheme and a large company scheme. This merged scheme lets eligible companies reduce their corporation tax bill, or claim a cash credit if loss-making, based on qualifying R&D spend. The additional benefit to companies under the merged scheme is worth 15% of their spend, if profit making, and up to 16.2% of spend for loss makers.

There is one exception to the merged scheme, and amongst other conditions is where a company spends more than 30% of their total annual expenditure on qualifying R&D. These companies qualify for the Enhanced R&D Intensive Scheme (ERIS), whereby claims for profit makers are worth an additional 21.5% of spend and cash credits for loss makers can reach 27% of spend.  

If you have a qualifying project claiming R&D Tax Relief can provide a valuable boost to a company’s finances, but it is important to understand the rules and limitations of the scheme by taking expert advice.

Who can claim R&D Tax Relief?

Businesses in any sector can be entitled to claim R&D Tax Relief, but they must be looking to make an advance to overall knowledge or capability in a field of either science or technology.

There are a number of qualifying conditions which all must be met for a company to have a qualifying claim, but the three most critical components of an R&D Tax Relief claim are that the company is seeking to make an advance in science or technology, they have identified scientific or technological uncertainty when undertaking their project, and the company has a competent professional that is able to state with clarity that the work they’re doing sits within the R&D guidelines.

There are various cost categories that can be claimed against, such as employment costs, sub-contractor expenses, consumables such as materials and utility costs and software, cloud data and hosting costs.

We’ve advised companies across the following sectors:

We are a member of the R&D Community, a group of tax advisers, accountants and consultants who drive best practice and compliance in R&D Tax Relief claims by sharing their knowledge. Working with others in our sector, we aim to be part of the development of an industry standard that will form an accreditation for accountancy firms practising in this area.

Thanks to our extensive experience in this field, we can guide you through the process of identifying which elements of your work qualify for a compliant R&D Tax Relief claim. Potentially, this could help you unlock hidden capital, so that you can put it to best use within your business.

If you’re keen to work with an accountancy firm that you can trust to provide you with expert advice on whether R&D Tax Relief could be available to your business, talk to us and you can be certain that we will help you maximise the opportunity, while complying with HMRC rules.

We’ll verify your eligibility 1 2 Which form of relief do you qualify for? Identify your R&D activities 3 Preparing your claim 4 Review 5 Submission 6 Payment received 7

 

Why choose Champion Accountants

Useful guidance

R&D tax claims are so much stronger when there is great client/adviser collaboration. As such here are some useful guidance links which may prove helpful:

DSIT guidelines - https://www.gov.uk/government/publications/guidelines-on-the-meaning-of-research-and-development-for-tax-purposes/meaning-of-research-and-development-for-tax-purposes-guidelines

Guidelines for Directors compliance - https://www.gov.uk/government/publications/help-to-see-if-your-work-qualifies-as-research-and-development-for-tax-purposes-gfc3

Frequently asked questions

Is my business too small to claim R&D Tax Relief?
No — there's no minimum size requirement. What matters is whether your work meets HMRC's definition of R&D: seeking an advance in science or technology, and facing genuine technical uncertainty along the way. We work with SMEs across sectors from engineering to food and drink to construction, many of whom undertake qualifying R&D activities.

We've claimed before under the old SME scheme — does anything change for us now?
Yes. Since the schemes merged, the way your claim is calculated and the rate of relief you're entitled to has changed, regardless of your company's size. There are also tweaks to eligibility of payments to sub-contractors. If you haven't reviewed your claim process since the merged scheme, it's worth checking you're claiming correctly and at the right rate — we can review your last claim as part of an initial consultation.

What if HMRC opens an enquiry into our claim?
HMRC has significantly increased its scrutiny of R&D claims in recent years, and enquiries are far more common than they used to be. We prepare every claim as best we possibly can to withstand that level of scrutiny from the outset. We also provide support to clients going through any HMRC enquiry so you're not left to navigate it alone.

How do we know if our work counts as R&D?
Your team must have read the R&D guidelines. Your competent professional is best placed to provide the detail required to demonstrate that your project may sit within the R&D scheme. If your team has worked to solve a technical problem where the answer wasn't readily available from public information, technical papers, journals, detailed web searches etc — in a product, a process, material or device — that's often a strong sign of qualifying activity. We collaborate with you to assess your project against HMRC's guidelines.

How long does the process take, and how much involvement do we need?
There is involvement needed from your team. You know best the work you’ve performed and when it was performed. We help articulate this and identify the potential costs that could be included within a claim. With commitment from both sides a typical claim could take 4 weeks from start to finish. 

Is there a cost if we don't qualify?
Champion work on a consultancy basis. There would be no cost to you until we agree that there is a claim to be pursued.