Research &
Development
UK Tax Credits by Lemon
Everything you need to know
Research and development (R&D) tax credits can be claimed for up to two years prior to the date of your claim. This gives you some time to get your business organised and make sure that all qualifying activities and costs are captured
An R&D tax credit is a cash payment from the government to encourage companies to conduct research and development, as well as other innovative activities.
R&D projects must relate to science or technology, however HMRC’s definition is broad and includes investment into IT systems, data, cloud computing, mathematics (a new addition), and more. The range of businesses carrying out qualifying activity is ever expanding. Various events over the past few years, notably the pandemic and Brexit, have meant companies have had to step up their innovation to overcome restrictions.
If you’re building a startup or developing processes and products to meet a demand in an evolving market, it’s likely that you’ll qualify for research & development (R&D) tax credits. R&D tax credits can be claimed for up to two years prior to the date of your claim. This gives you some time to get your business organised and make sure that all qualifying activities and costs are captured.
Our trusted specialists help you maximise your claim by identifying innovative activities while simplifying the process and taking care of your claim for you.
What documents I need?
To initiate a seamless and successful R&D Tax Relief claim for FY 23-24, we require the following key documents:
Company Unique Taxpayer Reference (UTR): A unique identifier crucial for your R&D claim.
VAT Number: Streamlining the claim process effectively.
PAYE Reference Code: Essential for identifying your company as an employer.
Employee Details – R&D Project:
Names of employees actively involved in the R&D project.
Details of Gross Salary, Employer’s National Insurance Contribution, and Pension
Contributions for each employee.
Transparently differentiate employees engaged in R&D projects and others.
Sub-contractor Costs (if applicable): Details of subcontractors involved in R&D activities.
Supplier Costs for R&D Projects: Information regarding supplier costs specifically related to R&D projects.
CT-600: Vital for justifying timely tax returns filing to HMRC.
Bank A/C Details: Facilitates direct payment of R&D Tax Benefit from HMRC.
How much can i claim?
- If you’re a profit-making SME you could claim a maximum amount of 25% of your R&D expenditure. If you’re loss making you can claim a maximum of 10%.
What activities qualify for R&D Tax credits?
- Employee costs including salaries, wages, Class 1 National Insurance Contributions and pension fund contributions
- Subcontractors – you can claim 65% of the relevant costs
- External workers
- Consumables, such as water, light and heat
- Software
- Clinical trial volunteers.
What are the benefits?
The main benefits of R&D tax credits include:
- You can claim for a wide range of costs
- There is no minimum amount that must be spent on qualifying R&D projects to be able to claim
- Providing your company meets the eligibility criteria, it doesn’t matter what sector or industry
- Your business is in Your business can still make an R&D tax credit claim even if it is not profitable
What are the benefits?
- A company or project is eligible for R&D tax relief if the undertaken work is a pivotal part of a specific project aimed at advancing science or technology, and some lenders require a minimum turnover (e.g. £50,000)
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