4 Ways To Determine If You Qualify For R&D Tax Credits

In 2002, the government introduced the research and development tax relief scheme for small and medium-sized enterprises (SMEs), providing support to companies who innovate and encouraging R&D expenditure across the UK. In 2016/17, the average claim for SMEs was £53,876, with £3.5bn claimed last year from nearly 40,000 claims. These figures would indicate that although there is an increase in claims, there are plenty of SMEs currently not claiming.

To help your SME understand if your project is suitable for an R&D claim, we’ve provided the 4 essential questions you should ask yourself to determine your eligibility.

4 ways to determine if you qualify for R&D tax credit

1) Has your project sought an advance in science and technology?

Your project must aim to create an advance to your overall business field, not just your company. This means an advance can’t just be an existing technology that has been used for the first time in your sector.

2) Has your project had to overcome uncertainty?

The project must solve a problem or provide an easier, more efficient or more effective solution, which was not previously possible. This means that your company or experts in the field can’t already know about the advance or the way you achieved it.

3) Can your project demonstrate research, testing and analysis?

You should show that the R&D needed research, testing and analysis to develop it. A simple description of the challenges and successes of the project will suffice to show your process.

4) Would a professional in the field find it easy work out your project?

Another professional should not have been able to come to the same conclusion easily. This can be shown by proving that others on the R&D team are professionals and having them explain the difficulties encountered, or by showing other failed attempts to achieve your advance.

R&D Tax Credits Apply to Many Industries

If you can prove that your project achieves all the above points, you will almost certainly be eligible for R&D tax relief.

This can apply to any company, in any sector. From social media and video games to tooling manufacture and packaging solutions, R&D tax relief applies to many fields. For example, 295 claims in 2016/17 were from the forestry, agriculture and fishing sector. Companies are realising that R&D tax credits are a viable option for many, leading to a steady increase in first-time applications, with over 10,000 in 2015/16.

For example, Daften Die-Casting were unaware that much of their development activity met the criteria for R&D tax credits and thus, nearly missed out on an R&D tax claim relating to £300k worth of research and development activities they had carried out.

Final Thoughts

Though the process to apply for R&D tax credits may appear daunting to SMEs and thus unattainable, the reality is very different. According to a September 2018 government report, each year the number of claims and amount claimed increases. The bottom line is that the criteria for R&D tax relief is attainable, even to those who feel they may not qualify. Ensure you are not missing out and see if any of your projects could claim R&D Tax Relief today. Simply email us and we’ll quickly let you know.

Email Us

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
Start your Tax Cloud claim now Discover if you qualify and ensure your R&D tax claim is maximised. Get started
Powered by Myriad Logo

Myriad are the creators of Tax Cloud, we help enterprises navigate, apply and secure tax incentives and grants. We specialise in R&D Tax Credits, Creative Tax Reliefs, Innovate UK grants, Horizon Europe grants, and R&D Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • Strong track record spanning 20+ years delivering R&D tax credit claims
  • Over £70m claimed and counting
  • Industry leading specialists
  • We employ technical, costing and tax experts and tax experts
  • Confident of delivering value to our clients, we offer our R&D tax services on a success fee-only basis.

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
Jillian Chambers Jillian Chambers Technical Analyst/Writer
Lauren Olson Lauren Olson Technical Analyst Manager
Rabia Mohammad Rabia Mohammad Corporate Tax Associate