Resource Hub: Eligibility

Can Limited Liability Partnerships Claim R&D Tax credits?

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Understanding which kind of businesses can claim R&D tax credits can be complicated, but we’re here to help. In this article, discover whether Limited Liability Partnerships (LLPs) can claim R&D tax credits and find out how Ayming can help your business.

Who can claim R&D tax credits?

R&D tax credits are only available to companies that are subject to Corporation Tax, therefore LLPs cannot directly benefit from the scheme. However, corporate partners in an LLP may be able to benefit instead.

Can an LLP still benefit from R&D tax credits?

Although LLPs can’t directly apply for R&D tax credits, they can still benefit from the scheme if they complete a qualifying R&D project in partnership with a company that pays corporate tax. 

This only applies to SMEs operating at a profit, as LLPs are only liable for a corporate tax reduction, not payable tax credit. To find out more about how R&D tax credits are calculated for SMEs operating at a profit or loss, read our related blog: What is the R&D tax credit rate?

These partnerships will usually agree on how they will share the profits, in proportion to how much work each company did in the project. The partner liable for corporate tax has to pay tax with their share of the profits, but they can also claim R&D tax credit back on the project’s qualifying expenditure and split it with the LLP. 

We understand that this subject can be complex, so we have created a working example to help you.

Here’s a helpful working example

Imagine that an LLP has partnered with a limited company to carry out an R&D project and they had £250,000 of qualifying expenditure to claim R&D tax credits.

As the limited company is a profit-making SME, they can claim up to 21.5% of their qualifying expenditure – which means they receive a benefit of £53,750.

The LLP agreed to a 60:40 split on profits, as the limited company carried out more of the work. Therefore, the LLP would receive an additional £32,250 on top of their profits. 

How Ayming can help

As Europe’s number one tax incentive advisor, Ayming employs a range of industry and technical experts that can guide you through the entire claiming process. Our consultant will work closely with you to ensure you receive the maximum benefit from your R&D claim. 

Get in touch today to kickstart your claim.