Many businesses believe that research and development (R&D) incentives don’t apply to them, but companies of all shapes and sizes can claim R&D tax credits.
When it comes to activities and expenditures, however, what qualifies for R&D tax relief exactly?
In this article, find out how to qualify for R&D tax credit and discover what counts as R&D across different sectors and industries.
Which businesses can claim R&D tax credits?
Every registered company in the UK is eligible for R&D incentive schemes, as long as the company:
- Is a limited company and therefore subject to Corporation Tax
- Carries out qualifying R&D activities (more on this later)
The type of R&D tax credits scheme that your company is eligible for will depend on whether it’s an SME (a company with less than 500 employees and either a balance sheet of less than €86 million or an annual turnover of less than €100 million), or a large company (a company that falls outside of the SME criteria).
SMEs receive R&D incentives in the form of Corporation Tax credits or tax relief, while large companies can access R&D tax credits through the Research and Development Expenditure Credit (RDEC) scheme.
As well as company size, your business must fulfil all the relevant eligibility criteria to claim R&D tax credits.
What expenses qualify for R&D credits?
The definition of R&D is quite broad, so identifying eligible expenditures can be tricky without a trusted and experienced R&D tax credits consultancy partner like Ayming.
Generally speaking, however, the government recognises and rewards innovative activities with R&D tax relief. HMRC has, therefore, outlined three key criteria that must be met for a project to be considered eligible for R&D incentives.
- The activities carried out during the project must fall within a specific field of science and technology.
- The end goal of the project should be to advance that field of science or technology. This often takes the form of a new or improved product, process, device, material, or service within that sector, such as by:
- Developing something entirely new
- Improving something that already exists
- Duplicating it
- The project must involve an element of uncertainty, such as challenges, constraints or trends that must be overcome.
Does my project qualify for R&D tax credits?
Use the links below to learn more about specific qualifying activities and expenditures across different industries and sectors.
- What counts as R&D in the financial services sector >
- What counts as R&D in the engineering and construction sector >
- What counts as R&D in the energy sector >
- What counts as R&D in the food and beverage sector >
- What counts as R&D in the life sciences, pharma and biotech sector >
- What counts as R&D in the manufacturing industry >
- What counts as R&D in process engineering >
- What counts as R&D in the technology sector >
Ayming can help you maximise your R&D claim
Now that you have a better idea about what qualifies for R&D credit, get in touch and we can help you maximise your claim.
Our knowledge of and experience with qualifying R&D activities and expenditures across various sectors and industries is vast. This means we’re well-placed to help you make sure your claim is robust and that the claims process is as streamlined and simplified as possible.
We’ll talk with the members of your team carrying out the research and development activities to fully understand your processes and uncover all qualifying expenditures. We’ll also tailor our approach to best suit the way your company operates.
In short, we’ll be with you every step of the way to fully support your R&D tax claim.