26TH APRIL, 2022

Is my small business eligible for R&D Tax Credits?

“Logic will get you from A to B. Imagination will take you everywhere.” - Albert Einstein.

If you’re reading this, you probably want to find out more about R&D Tax Credits and whether your business is eligible. Because let’s face it, SMEs in particular will want to grab all the extra financial help from government they can get.

In short, R&D Tax Credits enable businesses that incur costs in developing products, processes, software or services to receive a tax deduction or a cash payment from HMRC. It was designed in 2000 as an incentive to encourage company innovation across the UK by covering a large amount of the cost. In fact, up to 33% of qualifying R&D expenditure can be reclaimed - generous indeed!

R&D tax relief is one of the government’s top incentives, yet many businesses do not realise that they qualify for it. This is a huge missed opportunity indeed.

Why is innovation so important for SMEs?

There are loads of reasons why innovation and R&D are so important to your company. Not only does it hold the key to your business surviving (and indeed thriving), also keeps your brand fresh and new. Your customers will be more engaged and connected over time, and by coming up with the next exciting thing you’ll boost your brand reputation - and your bottom line.

So who exactly qualifies for R&D Tax Credits?

Everyone! Any company, in any industry can qualify for R&D Tax Credits. The key thing is that the R&D project itself looks to make an advance in science or technology. For example, you must show that you looked to advance the field, but also demonstrate the hurdles; how you overcame them as well as show that a professional in that field was unable to work it out.

Don’t forget too that the ultimate goal of your R&D project doesn’t have to have been achieved. In fact, it could have been abandoned altogether. This is about the ‘journey’ not the end result. So if there has been any advance in science or technology occurring, R&D Tax Credits may well follow.

Essentially, if your company is having a certain amount of risk through this R&D, whether it is a product, process or service, then it is highly likely to be eligible. Once your business starts scaling, it’s important to consider the amount of innovation that will take place in the coming years and getting ahead of the curve with a trusted partner like Tax Cloud. It’s also important to plan for an R&D tax claim from the outset.

This is great for businesses across a variety of sectors, as it is encouraging innovative behaviors and attitudes rather than penalising it with costs. However the eligibility criteria is not as black and white as other tax laws, making R&D tax claims something you can’t simply ‘DIY’ and hope for the best. It’s also extremely easy to overclaim or underclaim, which again is why using the Tax Cloud portal for your R&D tax claim is a sensible choice.

Surely SME claims for R&D Tax Credits are tiny - aren’t they?

No! In fact in our decade (and more) of experience, we can categorically say that even the smallest R&D tax relief claims can add up to big money. That’s pretty much because such a huge number of expenditure types can be included. Everything from staff salaries, materials, external worker costs, overheads, fuel and much more can be added to your R&D tax relief claim; so never assume it’s not worth it.

In fact, UK SMEs are claiming on average around £65,000 per annum. Image what you could do with that!

There's no minimum claim amount either

Ten years ago plus, it used to be the case that R&D tax relief claims had to total at least £10,000. However, the rules were changed back in 2012 that removed this requirement so now there’s no minimum floor. This is great for small companies especially.

Too many companies are still unaware of this, which again is a massive missed opportunity.

How do I apply for R&D Tax Credits as an SME?

At this stage, if you think that you are eligible, there are a couple of options that you can consider. Firstly, you can go through the process yourself, which will consist of timely research as well as engaging with the right individuals to assess your R&D to see whether you are eligible. And yes, educating yourself on this area of business might seem like a good idea; but the difficulty you’ll face is a lack of expertise so your claim ends up being incomplete or simply not successful. And there’s certainly a knack in creating your R&D technical report too. But with around £7.4 billion claimed every year in R&D Tax Credits, you definitely do not want to miss out.

The second option is to engage with a trusted specialist to help guide you through the process, through an initial consultation all the way to finalising the papers. Working with a trusted specialist such as Tax Cloud cuts out the stress of having to learn this area on your own, and also means that you have a trusted partner for future ventures. It’s simply a case of logging on from any internet connected device and completing your claim step by step with constant support from our experts.

Think your company may be due R&D Tax Credits?

Tax Cloud was developed by the R&D tax experts at Myriad Associates. It’s an easy, great value way to make your claim, with our team checking every stage of completion.

Fees are also much lower than our full consultancy service which appeals to SMEs in particular.

Why not start by using the free no-obligation Tax Cloud calculator and see what you could claim. Then, once you’re ready to begin, simply follow the steps to enter your figures and claim details step by step.

We’ll also check your claim before final submission so you can rest assured HMRC won’t come knocking.

“Great platform for R&D tax credits and a very helpful team + one of the most affordable fee structures I've seen in the market. Highly recommended!” - Outi Maria Pietilänaho, Co-Founder, Vimma Ltd.

If you’d like to discuss any aspect of R&D Tax Credits, please do drop us a message or call 020 7360 4437.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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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