What are R&D tax credits?
The UK government introduced R&D tax credits to foster innovation in the science and technology sectors. Companies undertaking R&D projects can benefit financially by reducing tax liabilities or receiving a cash payment, thus easing the financial burden of innovation.
Credits enable businesses to fund more ambitious projects and contribute to industry advancements. Under the SME scheme, companies could claim a 130% uplift in R&D expenditure before 1st April 2023. After this date, the uplift decreased to 86%.
Qualifying expenditures for these credits may include:
- Employee salaries
- Consumables required for R&D
- Software-related costs
- Subcontractor fees
- Utility expenses
Financial Calculations
Under the SME R&D tax relief scheme, before 1st April 2023, companies could claim an additional 130% of their qualifying R&D expenditure as a deduction from their taxable income. For example, if a company spent £100,000 on R&D, it could deduct £230,000 (£100,000 + £130,000) from its taxable profits.
From 1st April 2023, this uplift was reduced to 86%. Now, if a company spends £100,000 on R&D, it can deduct £186,000 (£100,000 + £86,000) from its taxable income. This reduction impacts the amount of tax relief companies can claim, making it essential for SMEs to adjust their financial planning accordingly.
Claim Pitfalls
Submitting R&D tax credit claims independently is an option, but enlisting the help of a UK tax specialist with deep expertise in R&D credits is strongly advised. Navigating the complexities of these claims can be challenging without the right knowledge.
HMRC has recently tightened its requirements, adding new criteria that must be met before a claim is considered valid. Filing errors can trigger extensive investigations and lead to significant penalties, making accuracy critical.
At Swift Grants, our mission is to simplify the process of obtaining government funding. Our skilled R&D Tax Credit Specialists are here to guide you through every step, ensuring a smooth experience—even if this is your first time dealing with R&D tax credits.
Who is eligible for R&D tax credits?
Limited companies subject to corporation tax can apply for SME R&D tax credits to encourage innovation and support research and development efforts.
Companies can reduce their tax liabilities and gain financial support to advance their technology projects.
To qualify, your company must:
- Be a limited company registered in the UK with fewer than 500 employees.
- Be engaged in developing new technology with genuine uncertainty of success.
- Have an annual turnover below £100 million or a balance sheet under £86 million.
How It Works
Our streamlined process makes claiming R&D tax credits simple and efficient. We guide you step by step to ensure your application is accurate and maximizes your potential benefit.
- Eligibility: We first verify if you qualify for an R&D cash rebate.
- Automated Calculations: Enter expenses, and our platform calculates the tax.
- Application: Answer a few questions about your business and R&D with our expert help.
Upon completing your application, our expert accountants will conduct a thorough review and expedite the claim process, relieving you of the burdensome task of managing HMRC interaction.
Uncertain about your company’s eligibility?
We're Here to Help!
How We Help
We ensure your CT600 and Tax calculations are accurately amended and thoroughly reviewed, leaving no margin for error. Our academic principles mean we’re perfectly positioned to maximise your claim, helping you achieve the highest possible value from your R&D tax credits.
You can be confident that there are no hidden costs or upfront payments, only results. Our differentiating factor lies in our unwavering dedication to your success. We charge a fixed 11.5% fee based on the benefit you receive from HMRC, payable only upon approval of your claim.
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