Claiming For R&D Tax Relief On Revenue Expenditure

If your business is actively conducting research and development as part of its operations, you may be aware that tax relief for qualifying projects is available. Many companies, however, don’t claim because they are unaware as to which activities are eligible and claiming can be complicated, even confusing. Luckily, companies such as TaxRise are able to help businesses to file these claims. This is something that businesses should look into because not claiming the tax relief they are entitled to, can mean losing out on potentially large sums of money that could have otherwise been invested back into the projects they are currently undertaking.

If your business could be receiving research and development tax relief but currently isn’t, here is some guidance on how you can claim on revenue expenditure.

Which projects qualify for R&D tax credits

To qualify for R&D tax credits, your company must pay UK corporation tax and be carrying out a project that aims to make scientific or technological advancements that have not previously been achieved. These cannot be solely for commercial gain, but must benefit the field in some way. The project does not need to be complete, or even successful, for you to claim tax relief on it – you must simply explain to HMRC what your endeavours were and how you’re aiming to resolve an uncertainty or make an advancement.

If you’re still unsure whether your business’ project qualifies, ask yourself a few of the following questions:

  • Are you differentiating yourself within your sector?
  • Have you taken a risk in attempting to achieve scientific or technological progress?
  • Have you invested time and resources into making processes or products more efficient?
  • Do you employ highly skilled staff with expertise in a scientific or technological field?

Answering yes to any of the above could indicate your activity qualifies, and it’s advisable to speak to an R&D tax specialist about making a claim.

What you can claim for

Seeking tax relief for eligible projects involves considering various expenditure aspects related to research and development (R&D). This encompasses not only direct costs, such as employing staff working on the R&D project and the associated materials, utilities, and software expenses but also costs associated with staff providers and selected subcontractors.

Understanding the specifics of subcontractor costs and when and how they can be claimed is crucial for maximizing tax benefits. The government provides guidelines on its website regarding the eligibility criteria and claiming procedures for subcontractor costs in R&D projects.

That being said, navigating these intricacies and optimizing the tax relief process may require the expertise of a tax consultant. A tax consultant can provide insights into the specific regulations, help identify eligible expenditures, and ensure compliance with guidelines, ultimately maximizing the available tax benefits for R&D initiatives.

How to claim on revenue expenditure

Claiming revenue expenditure involves several key steps. You can submit claims on your corporation tax return up to two years after the conclusion of the relevant corporation tax accounting period. The amount of relief you can receive varies depending on whether your business is classified as large or small. For small and medium-sized enterprises (SMEs), you can typically receive up to 230% of the revenue costs back in relief. To ensure accurate calculations and submission of your claim, it’s advisable to enlist the services of an accountant bury st edmunds, or a similar professional near your location. An accountant can help you navigate the process, maximize your eligible relief, and ensure compliance with tax regulations.

Record keeping

Although it’s not necessary to create new records specifically for an R&D claim, you will need to ensure your records are kept in a way that means access to information regarding and R&D projects is easily accessible. HMRC may wish to check your company’s records in order to verify compliance, so if you plan to claim for research and development tax credits, it’s worth getting them in order.



Meredith Weisser

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