Frequently Asked Questions

  • What are R&D tax credits?

    The Research & Development (R&D) Tax Credits scheme was launched back in the early 2000s as a way of rewarding companies innovating, conducting world-class research or developing cutting-edge technology.

    It’s a massive (and very valuable) incentive that provides a substantial tax rebate on eligible R&D costs. Companies can claim R&D tax credits on projects which are advancing a field of science or technology and overcoming scientific or technological uncertainty to do so.

  • How much are R&D tax credits worth?

    You can claim R&D tax credits at different rates depending on your accounting period, your profitability and your company size.

    The SME Scheme is the most popular scheme, available to most SMEs. The rate that you can claim depends on when the expenditure occurred.

    Up to 31 March 2023, companies can claim a real-world benefit of either 24.7% (profit-making) or 33.35% (loss-making). This reduces to 21.5% and 18.6% from 1 April 2023.

    The R&D Expenditure Credit is available for large companies and some SMEs that can’t claim through the usual SME scheme.

    For expenditure incurred up to 31 March 2023, the real-world benefit is 10.5%, increasing to 16.2% from 1 April 2023.

    The Merged Scheme will be used by all companies with accounting periods beginning on or after 1 April 2024. It gives companies between 15% and 16.2% back on their R&D costs.

    R&D-intensive, loss-making companies can claim a higher rate of 27% through the Enhanced R&D Intensive Support scheme.

     

  • What sort of work qualifies for R&D tax credits?

    Any project that aims to make an advance in science or technology or to make an appreciable improvement in existing technology may be eligible for R&D tax credits. You must also seek to overcome scientific or technological uncertainty to achieve your goal.

    As part of the Tax Cloud process our experienced specialist consultants review the details of your projects and can offer you more guidance if necessary.

  • How far back can I claim R&D tax credits?

    UK companies can make an R&D tax credit claim up to two years from the end of the accounting period. For example, a company with an accounting period ending 31st December 2024 can claim for work done in this year until midnight, 31st December 2026.

    You can claim for R&D tax relief even if you’ve already submitted your corporation tax return; you will need to submit an amended tax return within the deadline to make your claim.

    Usually, this means that companies can claim for the two preceding accounting periods. There is no requirement to claim for the periods in order. However, we recommend making your claim for the earliest period first, as it becomes harder to remember the details for the period the longer you wait.

    If you’re a first-time claimant or it’s been more than 3 years since you made a claim, you may need to notify HMRC earlier if you intend to make a claim.

  • What do I need to do to submit my R&D tax credit claim?

    Some companies will need to inform HMRC in advance that they plan to make a claim. They will need to do this using a digital service within six months of the end of the period to which the claim relates. This applies to first-time claimants and those who have not made a claim in the last 3 years.

    Speak to an advisor as soon as possible to determine whether you are eligible and ensure your claim notification is made within the timeframe.

    All companies must submit an Additional Information Form that includes details about the company, the R&D you did and the costs you're claiming. Tax Cloud helps you gather all this information and our experts will submit it to HMRC on your behalf.

    Your actual claim is made through your Corporation Tax return (CT600) by filling out the appropriate boxes. Tax Cloud's experts will also take control of this submission.

  • What costs qualify for R&D tax credits?

    You can claim for a variety of cost categories. These include:

    • Staff costs
    • Consumable items
    • Subcontractor costs
    • Externally provided workers (EPWs)
    • Clinical trial volunteers
    • Software costs
    • Cloud computing and data licences