Top Tax Cloud FAQs
Since its inception in 2017, Tax Cloud has been inundated with questions from businesses looking to maximise their R&D tax credit claims whilst avoiding the hefty fees paid to consultants.
In our latest post, we highlight some of the top questions we get asked when customers enquire with us.
1) What are R&D tax credits?
The R&D Tax Relief incentive is designed to encourage innovation and increase spending on R&D activities for companies operating in the UK. It’s one of the government’s top incentives for encouraging investment in research and development and allows up to 33.35% of a company’s R&D spend to be recovered as a cash repayment.
This entitlement to UK businesses has been in existence for over 17 years and nearly £2bn per annum is currently being claimed. On average SMEs are claiming £46,000 each per year.
The current rate results in a 26% benefit on R&D expenditure for profit-making SMEs and 33.35% can be achieved for loss-making SMEs. The Large Company scheme commenced in 2002 and the Research and Development Expenditure Credit (RDEC) scheme for Large Companies was introduced from April 2013. The current RDEC rate is 11%, which results in a net benefit after tax of 8.8%.
2) Is my business eligible for R&D tax credits?
Many businesses don’t realise that they are undertaking eligible qualifying activities. It is not uncommon for their accountants to forget to tell them about R&D Tax Credits or even to tell them that they don’t qualify. If your technical lead (the R&D manager, lead engineer, or lead developer) is struggling to overcome the technical challenges of your project – if they are scratching their head wondering how to proceed, or losing sleep worrying about the technical uncertainties they face – your project will almost certainly qualify for R&D Tax Credits.
In addition, to benefit from HMRC’s R&D tax credit incentive, you must:
- Be a limited company in the UK that is subject to Corporation Tax
- Have carried out research and development projects
- Have spent money on these projects
3) What counts as R&D?
The government’s definition of what is classed as research and development is relatively broad. The key phrase in their definition is that the R&D project must from the outset aim to make a technical advancement in a product, process or software over and above what is already available. The project needs to challenge your experienced team.
No matter the size of your business, as long as your company is attempting the above then you could be carrying out an eligible R&D activity.
More specifically, if you are:
A. Creating a new product, service or process
B. Improving an existing product, service or process technologically/scientifically
Then your chances of eligibility for this scheme are very high.
4) What costs qualify for R&D tax credits?
You can claim relief on costs that have been expensed through the Profit & Loss account and in certain circumstances you can also claim capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets). The main areas of costs that can be claimed are: -
- staff costs (gross pay, employer's NI and employer's pension contributions);
- agency workers (externally provided workers),
- software license costs, and
- consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process).
5) How do I know which R&D tax credit scheme is right for my business?
There are 2 schemes currently available to make an R&D tax credit claim, which one you use will depend on whether you are an SME or a large company.
For a company to be regarded as an SME it must have a group headcount of below 500 staff and meet at least one of the following: a turnover of below €100 million or gross assets of less than €86 million. A Large Company is any company that exceeds the SME thresholds.
6) How much could I claim?
To work out how much you could be eligible to claim, click here to use our free R&D tax calculator.
7) How does Tax Cloud work?
Tax Cloud works in 4 Easy Steps:
1) Sign up with your company name and we automatically verify your details.
2) Add your R&D projects, activities and costs in the Tax Cloud portal.
3) Myriad Associates (the creators of Tax Cloud) provide their specialist consultants to review and support your claim by providing feedback and recommendations
4) Tax Cloud takes your project descriptions and costs and creates the R&D tax claim report. Myriad will submit this report to HMRC on your behalf and answer any questions raised by HMRC.
8) Why would I use Tax Cloud rather than my accountant or a specialist?
Aside from the cost saving aspect, Tax Cloud has a whole host of features that benefit you and your business.
Tax Cloud Features include:
- Focused expertise in R&D claims
- Online service, no meetings
- Dedicated specialists in SME R&D claims
- Expert review of all aspects of a claim
- Quality service at a low fee
- No upfront fees
- No minimum contract period
- Xero Integration
9) How much does it cost to use Tax Cloud?
Successful claims made through Tax Cloud are 2.5% or 5% of your corporation tax savings. To break it down simply, our pricing works as follows:
- For claims receiving more than £200k in tax savings, the fee for using Tax Cloud is 2.5%.
- For claims receiving up to £200k in tax savings, the fee for using Tax Cloud is 5%.
These fees are subject to a minimum fee of £1,000 + VAT. To get a closer estimation of what benefiting from our portal and expert advice would be, Use our R&D tax calculator on the homepage and enter your estimated figures.
- No upfront fee
- No fee charged if you aren’t eligible
- Free amended CT600 as part of the claim process.
To book your free Tax Cloud demo, click here
- Submitting R&D tax claims since 2001
- 100% success rate
- Over £100m claimed and counting
- Industry leading specialists
- In-house technical, costing and tax experts
- Member of the Research and Development Consultative (RDCC) committee
Meet some of the team behind Tax Cloud