If you’ve recently discovered that your company may be eligible for the government’s research and development (R&D) tax credits incentive, then chances are you’re looking for a reliable R&D tax incentive calculator to calculate your potential claim.
In this article, find out how R&D tax credit calculations work and how accurate the online R&D calculators are. Plus, discover Ayming’s straightforward and speedy Rapid Claims process for R&D tax relief.
How are R&D tax credit calculations made?
Calculations for SMEs
Calculating R&D tax credits for SMEs depends on whether your business is making a profit or loss. R&D tax credits for profit-making businesses reduce your business’ Corporation Tax by a relief rate of 25%. That means that if your research and development spend last year was £100,000, your tax bill could be reduced by £25,000.
If your business is loss-making, your R&D tax credit will be received in cash, simply because there is no tax liability to offset. The rate of relief for loss-making businesses is up to 33%. That means that if your research and development spend last year was £100,000, you could receive a £33,000 cash credit.
Calculations for large companies
For large companies (and certain SMEs), R&D tax credits are accessed through the Research and Development Expenditure Credit (RDEC) scheme. An RDEC claim is paid as a taxable credit of 13% of your qualifying research and development expenditure. That means that if your research and development spend last year was £100,000, you could receive an £13,000 tax reduction or cash credit
What are the advantages of R&D tax credits calculators?
- They can potentially give you a rough estimate – Using an online R&D tax calculator can give you a ballpark figure on how much R&D tax relief you could receive.
What are the disadvantages of R&D tax credits calculators?
- Likely to either over or underestimate your claim – Although R&D tax calculators can be useful for giving you an idea of what your business may stand to receive, they often tend to either over or underestimate your claim. An underestimate might mean you miss out on potential benefits, whereas an overestimate exposes you to risk of an HMRC enquiry.
- Not a suitable substitute for proper professional advice – The figures you receive from R&D tax claim calculators will never be as accurate as professional advice from established R&D tax credits specialists like Ayming.
- May not account for all qualifying R&D projects and expenditure – To work out your exact return, you’ll first need to identify all your qualifying costs, some of which may be easy to miss. At Ayming, we help you uncover all your qualifying R&D activities to help you optimise your claim and maximise your return.
- Not nuanced enough to give you the full picture – The majority of R&D tax credit calculators aren’t nuanced enough to allow for unusual or anomalous business circumstances. For example, the first question these calculators often ask is whether your business is small or large (so as to determine eligibility for either R&D tax credits or the RDEC scheme). However, it can be more complicated than that: for example, some SMEs must claim under the RDEC scheme due to their specific circumstances and limitations.
Discover the real value of your claim with Ayming’s Rapid Claim process
Here at Ayming, we know that although R&D tax credit calculators can be a good indicator, they can’t give you a true reflection of the full value of your R&D tax credit claim.
That’s why we’ve taken all our experience and condensed it into a simple, effective process called Rapid Claims.
The first step in our Rapid Claims process gives you a quick, hassle-free way to find out if your business qualifies for R&D tax relief. If it does, we can then support you in maximising your claim with minimal input from you, delivering your claim in just 5 days.
- See if your business qualifies in just 5 minutes
- We’ll complete your R&D Tax claim in 5 days
- You get paid by HMRC in as little as 5 weeks