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R&D Tax Credits
Our service optimises your R&D Tax Relief claim, reducing the likelihood of an enquiry and saving you valuable time, money, and unnecessary stress.
Trusted and compliant specialists
We have established a reputation for excellence and integrity in the R&D tax credit sector. Our clients trust us to handle their claims efficiently, compliantly and ethically, providing them with peace of mind throughout the process.
Managed by experts
Our experienced team of R&D tax specialists provides expert guidance to navigate the complexities of the R&D tax credit process. We ensure that you understand the eligibility criteria and maximise your claim potential.
Maximise your tax claim
We help our clients to identify all qualifying activities and expenditures, with an aim to maximise their R&D tax relief potential. Our main goal is to ensure you receive the maximum benefits you are entitled to, compliantly.
Our numbers
47.6
R&D tax relief claimed in UK since start of scheme (£bn)
200+
Amount RDI has successfully claimed for our clients (£m)
95
Percentage of clients that use RDI for the next financial year (%)
The trusted experts you need to manage your R&D tax credits claim
At RDI Solutions, we have a proven track record of assisting over 3,000 businesses in successfully claiming over £200 million in government-funded tax incentives through various tax relief schemes. As a trusted tax incentive specialist, we specialise in helping qualifying businesses of all shapes and sizes, across diverse sectors, navigate the complexities of claiming R&D Tax Credits.
R&D Tax Credits Explained
Research and Development (R&D) tax credits are a special benefit provided by the UK government to companies that invest in discovering new things or making better products. The government actively aims to encourage companies to be more innovative and enterprising because it helps the whole country economically whilst also ensuring the UK remains one of the leading figures on a macro level too.
Should a business meet the qualifying criteria, it can claim back a percentage of the amount that has been spent on R&D activities. And if an R&D claim is successful, the business will either get a direct cash payment from HMRC, a reduction in its Corporation Tax bill, or a refund on overpaid tax.
"Over the years I've seen first-hand that by strategically claiming R&D tax credits, businesses can unlock a world of possibilities, fueling their progress whilst significantly reducing their tax burden."
Paul Boyle
Senior Tax Incentive Consultant
What are
R&D Tax Credits?
R&D tax credits are a UK government tax incentive scheme established to reward businesses for investing in innovation.
What are the key benefits of using our R&D tax service?
RDI Solutions
Over 5,000 successful tax relief claims
£200m+ rewarded back to our clients
Time-saving claim specialist claim service
130+ in-house tax experts
Free HMRC enquiry defence as standard
Offices nationwide
Award-winning customer support
Classic Accountants
Insufficient specialist experience
Liable to overlook qualifying costs
Basic technical expertise
Prolonged service
No enquiry defence as standard
Limited time available to specialist areas
General Consultants
Disorganised approach
Liable to introduce non-qualifying costs
Basic technical experience
Burden on your business to fulfil the data
Lack of experience in defending HMRC enquiries
Our relationship with HMRC
With extensive experience collaborating with HMRC, the RDI Solutions team actively contributes to the development of best practice guidelines.
On a daily basis, we encourage and handle routine tax relief claim matters, whilst cooperating with HMRC's compliance team to address any potential enquiries.
Our strong working relationship and comprehension of the challenging and ever-changing world of tax relief enable us to engage in meaningful discussions and to effectively resolve our client's claims and enquiries in the most professional and compliant manner.
Your R&D tax credits questions answered
A guide to R&D Tax Credits
It often goes unnoticed by many companies that they are actually spending money on activities that qualify for R&D tax relief. As a result, they unknowingly miss out on potential benefits such as receiving extra cash or paying less in taxes.
If a company has dedicated its time and resources to create a new product or service, or has made efforts to improve something that already exists, there's a chance the business could be eligible to reclaim a significant portion (up to 33%) of R&D expenditure from HMRC. This opportunity is available through the SME scheme for smaller companies, while larger companies can make claims under the RDEC scheme.
Did you know?
Only 10% of eligible companies are currently taking advantage of R&D Tax Credits. That means a staggering 90% of UK businesses are missing out on the scheme.
A brief history to R&D tax credits
The UK Government introduced the Research and Development (R&D) Tax Credit Scheme in 2000 to promote innovation and support businesses engaged in R&D activities.
Initially available to large companies only, the scheme expanded in 2002 to include Small and Medium-sized enterprises (SMEs). The government recognised the crucial role of R&D in driving economic growth and competitiveness on both a national and macro scale, leading to ongoing refinements and enhancements of the scheme.
In 2008, the scheme underwent a significant transformation, with large companies benefiting from the Research and Development Expenditure Credit (RDEC) scheme, providing relief in the form of a tax credit. SMEs continued to benefit from the SME scheme, which offered tax relief through an enhanced deduction on qualifying R&D expenditure.
These R&D tax credit schemes have played a vital role in incentivising businesses to invest in Research and Development, fostering innovation across diverse sectors of the UK economy. To UK businesses R&D tax credits can be a vital source of funding, allowing them to prosper and push on further with growth.
A bief history
Is your business eligible for R&D tax credits?
To determine if your business is eligible for R&D tax credits in the UK, several factors need to be considered. The primary criterion is whether your company has engaged in qualifying Research and Development activities. These activities typically involve seeking to achieve scientific or technological advancements through the resolution of technical uncertainties.
To be eligible, your business should be a UK limited company subject to UK Corporation Tax. It should have incurred expenditure on R&D projects that align with the guidelines provided by HM Revenue and Customs (HMRC).
It's important to note that eligibility is not limited to high-tech or scientific industries. R&D tax credits are available to a wide range of sectors, including manufacturing, software development, engineering, and more.
To assess your eligibility and make a claim, you will need to demonstrate the nature of your R&D activities, the challenges faced, and the innovative solutions developed. Working with an R&D tax specialist such as RDI Solutions can be beneficial in understanding the specific criteria and maximising your claim.
Ultimately, it is recommended to consult with HMRC guidelines or seek professional advice to determine if your business meets the eligibility requirements for R&D tax credits.
In a nutshell, to benefit from R&D tax incentives, your business must:
Be a limited company in the UK that is subject to Corporation Tax.
Must have carried out activities that introduces a new product, process or service - or improves existing offerings.
Must have spent money when trying to achieve this.
Subcontractor and Consultancy Costs
What costs qualify for R&D tax credits?
While you might be carrying out activities that qualify as R&D, it's important that you know which costs can actually be claimed for.
Recognising and identifying R&D costs can be difficult, but usually, the main ones are:
Staff costs that qualify for R&D activities encompass a range of expenses related to the employees directly involved in eligible R&D projects. This includes the wages and salaries paid to these individuals, including bonuses and overtime. Additionally, employer's National Insurance Contributions (NIC) and pension contributions associated with the qualifying staff can be considered as eligible costs.
This includes any work subcontracted out to an individual or company. You can also claim for third-party workers, such as agency workers who helped to contribute to the projects that were worked on.
The expenses associated with the raw materials used or modified during the R&D process (which cannot be sold or included in the final product for sale) are considered as costs. Also any utilities costs such as water, gas, electricity that were used during the R&D project.
Staff Costs
Materials and Consumables
Please note, there are many more types of R&D costs that you can potentially claim for.
Simply get in touch on 0330 133 1856 and one of our helpful and knowledgeable consultants will be able to assist with your questions.
Is your business
What costs
R&D Tax Credits work by offering cash credits and corporation tax reductions to eligible companies performing R&D.
Which industries can claim R&D tax credits?
Every company, regardless of the industry it belongs to, has the opportunity to claim R&D tax credits as long as its activities align with HMRC's guidelines for Research and Development.
However, certain industries tend to make more substantial claims compared to others.
Below is a list of the top 10 industries that have the most success when claiming R&D tax credits:
-
Manufacturing – 33.86%
-
Professional, Scientific & Technical – 22.15%
-
Information & Communication – 15.19%
-
Financial & Insurance – 6.74%
-
Wholesale & Retail Trade, Repairs – 5.27%
-
Construction – 3.58%
-
Mining & Quarrying – 3.38%
-
Admin & Support Services – 3.00%
-
Arts, Entertainment & Recreation – 2.15%
-
Education – 1.21%
Which R&D tax credit scheme is correct for my business?
The choice of incentive for claiming an R&D tax credit will primarily depend on whether your business falls under the category of an SME or a large company.
SME Scheme:
Fewer than 500 staff and either not more than £100 million turnover or £86 million gross assets. Most companies, including start-ups, fall into this category.
RDEC Scheme:
500 staff or more and either more than £100 million turnover or 86 million gross assets.
Which ind
Which R&D tax scheme
Profit Making
Loss Making
Types of R&D Tax Credit Scheme
SME
Scheme
25%
33%
RDEC
Scheme
Fixed rate at 13%*
*RDEC Scheme is subject to Corporation Tax so the final benefit is nearer to 10.5% after tax deduction.
How much is an R&D tax credit claim worth & how is it paid?
R&D tax credits are determined by evaluating your R&D expenditures (the qualifying key areas as mentioned above).
To calculate your R&D credits, you must identify eligible expenses and multiply them by the applicable rate (refer to the details below). This process yields your 'enhanced expenditure'.
By subtracting your enhanced expenditure from your taxable profits or incorporating it into your losses, you will achieve one of the following outcomes:
-
A reduction in Corporation Tax if your business is profit-making.
-
A cash credit if your business is loss-making.
-
Or a combination of both, depending on your specific circumstances.
How much is an
Profit Making
Profit
Making
HMRC will deduct the value of your increased R&D expenditure from your taxable profit. The R&D tax credit amount is determined by the difference between your Corporation Tax bill before and after the R&D credit is taken into account.
If the increased R&D expenditure exceeds your taxable profit, it results in a trading loss, and a loss-making calculation is utilised. This is illustrated in the second R&D tax credit calculation.
The minimum R&D tax credit you can receive is 18.85%, which is the break-even rate. Profitable companies have a maximum cap of 25% for their R&D tax credit.
Loss Making
Loss
Making
If your company is experiencing a loss, your R&D credit is determined by combining your enhanced R&D expenditure with your trading loss, applying a fixed rate of 14.5%. Consequently, the larger your loss, the higher the percentage of R&D credit you will be eligible for based on your R&D expenditure.
However, it's important to note that the total R&D credit you can receive is capped at 33.35% of your R&D expenditure. This means that even if your loss and R&D expenditure would potentially result in a higher credit percentage, the maximum amount you can claim is limited to 33.35% of your R&D expenditure.
What is the time limit to claiming R&D tax credits?
The time limit for claiming R&D tax credits is up to two years after the end of your accounting period. This applies to both profit-making and loss-making companies. If you have already filed your corporation tax return, you can still revise it within the two-year period to include the R&D tax credits.
For the first accounting period starting on or after April 1, 2023, a Claim Notification must be submitted when claiming R&D tax relief for the first time.
Accounting periods are typically 12 months long, and the R&D tax credit claim must be submitted by the end of the accounting period plus two years. Changing the accounting period is possible to extend or shorten the claim period. Alternatively, advance funding options are available to receive a portion of the future R&D tax credits in advance.
If the R&D project started before the eligible accounting period, ongoing expenses can still be claimed as long as scientific or technological uncertainties remain unresolved. Claims made beyond the two-year limit are generally not accepted unless exceptional circumstances exist.
What is time limit
How long does it take to receive funds from HMRC?
HMRC has a Service Level Agreement (SLA) of 28 days for processing both SME and RDEC claims, ensuring a timely payout.
However, in June 2022, the SLA was extended to 60 days due to an increase in fraudulent claims detected by HMRC. While no specific date has been provided, HMRC is actively working towards returning to the 28-day processing timeframe.
How long does
On average, it takes approximately 4-weeks to receive funds from HMRC.
Speak with expert
Work with trusted experts
Discover how we can help your business to claim R&D tax relief in the right way today.
Understanding the complexities of bringing forward robust and compliant R&D tax credit claims can be extremely challenging if you are not an expert.
With the landscape across the market ever-changing, now, more than ever, it's important to work with trusted and reputable tax specialists that are able to talk your language and get on with the task at hand.
At RDI Solutions, our in-house team of 130+ tax relief specialists is made up of ex-HMRC inspectors, sector experts, and chartered accountants. Our reach spans 4 office locations nationwide and to date we have helped over 3,000 businesses claim back over £200m in tax relief.
Trusted by
Britain's leading brands
To find out more about how we could possibly help you and your clients, simply visit our Accountancy Partnership Scheme page to see how you and your clients might benefit from our services.
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