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R&D Tax Credits Explained

The UK’s Research & Development (R&D) tax relief schemes offer generous tax incentives for a wide range of businesses. We're here to help make the process of claiming the greatest possible relief as easy and hassle-free as possible, whilst ensuring you maximise the benefits of the scheme.

R&D for Tax Purposes – Not Just Scientists in White Coats

The R&D tax relief schemes are remarkably inclusive, designed to be applicable across any sector. The definition of R&D for tax purposes is actually much broader than you might think. Simply explained, it's quite likely that some of the challenges faced on your business projects on a day-to-day basis could qualify as eligible expenditure.

The rules and guidelines governing this niche area of tax are complex, but working with Ayming you can be assured that any qualifying activity will be identified thanks to our team's in-depth understanding of these complexities, combined with their own industry-specific expertise. It's this combination of tax and technical knowledge which is integral to maximising our clients' R&D tax claims.

Which scheme should I choose & how much can I claim back?

SME R&D Tax Credits explained:

If your business qualifies as an SME under the R&D tax legislation you could claim back up to 33p in every £1 of qualifying expenditure as a loss making entity, or up to 26p in every £1 of qualifying expenditure if you’re making a profit. This could be realised as relief on your payable corporation tax, or in some instances as a cash credit from HRMC.

Not sure what qualifies as an SME? Check the definition in the R&D Tax for SME infographic below. Click image to enlarge...

R&D Tax Credits explained

Large Company R&D Tax Credits explained:

If your business falls into the Large Company categorisation you will claim under the R&D Expenditure Credit scheme (RDEC) which gives back up to 8.8p for every £1 of eligible expenditure before 1st January 2018, and 9.7p for every £1 of eligible expenditure afterwards. You may have also heard of the R&D Tax Relief scheme for Large Companies, but for expenditure incurred after 1st April 2016 all Large Company businesses must claim under this RDEC scheme.

Not sure what qualifies as a large company? Check the R&D Tax for Large Companies infographic below.

R&D Tax Credits explained

R&D Capital Allowances (RDAs) explained

R&D Capital Allowances (“RDAs”) allow you to claim a 100% first year allowance on R&D capital expenditure, which is significantly more generous that most other types of capital allowance.

If you are carrying out qualifying R&D activities, it is likely that you have incurred some capital expenditure which would qualify for RDAs.

R&D Allowances are based on the same definition of R&D as the R&D tax credits schemes. We therefore recommend that you review your eligibility for R&D Allowances in conjunction with the R&D tax schemes.

R&D tax credits explained?

We hope you’ve got a clearer idea of what R&D tax credits are now you’ve read this far. We speak to companies every single day who don’t believe the R&D tax credits schemes apply to them but in reality R&D for tax purposes covers a much broader range of activities than you might think. And the scheme’s rules and guidelines are designed to be applicable to all industries.

If you’re still not sure what qualifies for R&D tax credits, or if you’re just not sure if you’re claiming everything you’re entitled to then contact us today. With over £150m of R&D tax credits claimed for our UK clients, we’re well placed to guide you through this niche area of tax. We work with companies of all shapes and sizes, and across a wide variety of industries to ensure their business enjoys the maximum financial rewards.