Research and Development (R&D) reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.

We know it’s become something of a cliché but we think it’s worth repeating – the coronavirus pandemic and subsequent global lockdown has wreaked havoc on peoples’ lives in terms of mortality and economic downturn – with perhaps harder times to come?

Economic forecasts are always a challenge to make.

When the furlough scheme ends and Bounce Back Loans are reeled in, will companies survive?

With cash flow and revenues stretched, R and D tax relief is something you need to consider.

The following video provides a useful summary too:

Hamilton Blake Consulting work with many SMEs and we do get asked questions about R & D tax relief and rightly so.

Before we look at the finer details, let’s define in simple terms what R and D means to you as a business:

  • You are able to claim research and development tax credits on R&D revenue expenditure, such as day to day operational costs directly relating to the innovation project
  • Generally, though, you cannot include capital expenditure within the R&D tax credit claim

You can always check eligibility by calling or emailing us. 

What you need to be aware of though is what counts as revenue expenditure.

You need crystal clear clarity on this as so often Small and Medium Enterprises don’t fully understand what can be claimed.

You can claim for:

  1. Staffing costs
  2. Externally Provided Workers (EPWs)
  3. Software
  4. Consumable items
  5. Clinical trial volunteers, if you’re in the pharmaceutical industry

Different kinds of R and D Tax Relief:

There are different types of R&D relief, depending on the size of your company and if the project has been subcontracted to you or not. You can find more in this link, which we summarise partly below: 

You can claim SME R&D relief if you’re a SME 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.

SME R&D relief allows companies to:

  • deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
  • claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss

Finally, if you meet the criteria for R and D tax relief, get in touch with HB Consulting today.