R&D tax relief

R&D tax relief is available to UK companies that are subject to corporation tax and are undertaking qualifying research and development activities. It applies across a wide range of sectors.

To qualify, a company must:

• Be a UK limited company subject to Corporation tax
• Have carried out qualifying R&D projects
• Have spent money on those R&D activities
• Be able to demonstrate that the work involved scientific or technological uncertainty and aimed to make an advance in that field

Many businesses assume that R&D tax relief only applies to traditional “lab coat” sectors like pharmaceuticals or engineering. In reality, R&D can take place in almost any industry – as long as the work involves overcoming scientific or technological uncertainty in an attempt to advance the baseline level of knowledge in a field.

It’s about the ‘activity’ you’re undertaking, not the industry. If your team are pushing technical boundaries, creating new processes, or improving existing systems in a way that isn’t straightforward, it’s worth exploring if you qualify.

Staff costs, expenditure on subcontractors, externally provided workers, materials and consumables (including utilities), computer software, cloud computing costs and data licenses. For more detail on the costs that can be claimed, you can read our R&D tax credits blog.

• Overclaiming or underclaiming costs
• Assuming your work doesn’t qualify or incorrectly assuming it does
• Lack of supporting documentation
• Using template or generic reports
• Missing deadlines or failing to plan ahead.
• Claiming under the wrong scheme.

Working with an experienced adviser helps avoid these mistakes and ensures your claim is robust, well-documented and maximised.

1. We check whether a pre-notification is required.
2. If pre-notification is required, we can submit this.
3. Identify the qualifying projects and qualifying costs.
4. Prepare R&D report.
5. Prepare and submit Additional Information Form (AIF).
6. Include and submit R&D claim on tax return.

• Timesheets if they’re prepared and payroll data/costs for R&D staff and externally provided workers.
• In the absence of timesheets we would need a fair and reasonable percentage of each employees time spent on the R&D project.
• Details of consumables and software used in the R&D process.
• Details of any subcontracted expenditure.
• Whether the project is grant funded or your company has received any subsidies in relation to the R&D work.
• Any information as to whether the subcontracted work was completed, or partially completed overseas.
• Consider the five key questions on the Additional Information Form for each project.