RESEARCH & DEVELOPMENT (R&D) TAX RELIEF

Research and Development (R&D) tax relief is a corporation tax (CT) relief that can reduce your CT liability or provide you with a payable tax credit. In order to qualify the company must be undertaking qualifying R&D.  That is when the R&D project undertaken seeks to achieve an advance in overall knowledge in a field of science or technology.

 A qualifying R&D project must be in a field of science or technology whilst work in the arts, humanities and social sciences is specifically excluded for these purposes

There are two schemes:

 1. The SME Scheme

 Under this scheme a company can gain relief of 230% of qualifying expenditure.  In certain circumstances loss making companies can surrender losses for a payable tax credit.

 2. Research and Development Expenditure Credit (RDEC) scheme

A taxable credit of 12% of qualifying R&D expenditure – increased to 13% from 1 April 2020.  For loss making companies the tax credit is fully payable (subject to restrictions).  If a company has no CT liability it can benefit through a cash payment or a reduction of tax or other duties due.  The payable credit is limited to the company’s PAYE/NIC liabilities of the staff engaged in qualifying activities in the accounting period.

SME’s can claim RDEC if they do subcontracted or subsidised research. Companies in groups can surrender the RDEC against another group company’s CT liability.

A company is SME if it, or the worldwide group to which it belongs, have a staff count of less than 500 and either a turnover of less than €100 million or a balance sheet total of less than €86 million.

The SME Scheme is considerably more beneficial than the RDEC.  For £100,000 of qualifying expenditure the maximum benefit that can be gained under the SME Scheme is £33,350 (£100,000 enhanced at 230% and surrendered at 14.5%).  Whereas under the RDEC Scheme the maximum benefit that can be gained is £10,530 (£100,000 * 13% = £13,000 taxed at 19% giving £10,530).

The R&D project costs that qualify for these purposes are:

  • staffing Costs
  • consumable Items – items used up or transformed in qualifying R&D projects
  • software – licences for software directly wholly or partly employed in the R&D activity
  • externally provided workers – staff provided through an external agency
  • subcontracting – there are variations in the rules between the two schemes.

The SME Scheme is generous enough to be a notifiable State Aid and a company can’t claim under the SME Scheme if it is receiving any other notifiable State Aids for the same R&D project. Where a notifiable State Aid grant has been received then it would still be possible to claim under the RDEC Scheme.  It is also not possible to claim under the SME Scheme for subsidised expenditure, though again it would be possible to claim for the non-subsidised expenditure.  The expenditure covered by the subsidy can be claimed under the RDEC Scheme.

Claims for either scheme are made in the Company Tax Return or an amendment to the Company Tax Return.  A claim can be made as long as it is possible to amend the Return. Usually two years after the accounting date.

We can help you make a claim and support you through the process.  There are no charges until you receive benefit.

If you would like to discuss any aspect of the above or talk through a potential claim, then please get in touch.

To download our factsheet on R&D Tax Relief – click here  

 

Testimonials

"I found Graham and Creative Tax Reliefs through a Google search as we had a client that was eligible for Theatre Tax Relief (TTR). I and a colleague had read through HMRC’s guidance a number of times and felt confident that we understood how it worked, however, we had no experience in claiming TTR. It seemed a no-brainer to work with Graham because Graham, as a former Creative Tax Reliefs specialist with HMRC, knew how to prepare and present claims to HMRC, would be certain of the calculations, knew where the boundaries were and would achieve maximum benefit for the client. We prepared the accounts and submitted the CT600 as per usual with input from Graham whilst he liaised directly with HMRC’s Creative Industries Unit in respect of the client’s TTR claim. The client received their tax credit without issue and in an amount greater than expected. Our client was delighted as were we and we look forward to working with Graham going forward. "
Ian Bragger, Partner at Harris & Co (https://www.harrisaccounts.co.uk/)
"I am so pleased and relieved that Graham got in touch with me about Theatre Tax Relief. I had mistakenly thought that we were not eligible but so far Graham has claimed nearly £100,000 in tax credit for us. This is not only an enormous benefit and can be ploughed back into the work that we do but it would have been extremely short-sighted of us not to be claiming the money that is due to us. Graham has made the whole process so simple and easy. I cannot recommend him highly enough"
Sarah Gobran, Co-Founder & Producer of The Guildford Shakespeare Company (https://www.guildford-shakespeare-company.co.uk)
"NCO engaged Graham at the start of 2019 and has developed a wholly positive and ongoing relationship ever since. Not only has Graham increased our understanding of OTR and how it applies to NCO, he has taken all the stress and strain away from the process. His previous experience as a tax specialist at HMRC has proved invaluable as has his ability to explain the complexities to us in a way we can understand! I cannot recommend Graham more highly. "
Sophie Lewis, Managing Director of the National Children's Orchestras of Great Britain (https://www.nco.org.uk)
"Graham explained very clearly what was needed and then delivered exactly as he said he would. Graham prepared the computations and submitted the claims on our behalf and we didn't have to deal with HMRC at all. This was the easiest piece of tax work that we have ever had to do"
Matthew Quirk of The Merry Opera Company (https://www.merryopera.co.uk)
"Our accountant struggled with VGTR so we engaged Graham and his company. Graham prepared all the necessary computations and submitted the claim on our behalf. This was paid by HMRC without question and in an amount in excess of what we had previously expected. We are delighted and cannot recommend Graham or his company highly enough"
Ashley Stancill, Director at HyperSloth Games (https://www.hypersloth.co.uk)
"It was a pleasure working with Graham on our claim for Film Tax Credit for Stuffed. For independent creators working in Film and TV, the Tax Credit is a vital part of making your film a reality. Graham is an assured and calm voice in the often-intimidating world of tax. I’d highly recommend Graham to my colleagues working in Film and TV. "
Carys Lewis, writer and director of the 2019 BAFTA Cymru Nominee short film Stuffed (http://www.caryslewis.ca/)
"With no clear guidance on how to claim Theatre Tax Relief and after spending a considerable amount of time consulting with colleagues, accountants, reading huge, incomprehensible HMRC guidelines and generally worrying that the company was missing the TTR boat, I spoke to Graham. Everything was plain sailing for us after the initial consultation – with very little effort on our part, Graham made a successful submission and we have just received a substantial payment. I am delighted at the outcome and have no hesitation in recommending Graham and his company"
Sue Andrews, former Executive Director of Northern Broadsides Theatre Company (https://www.northern-broadsides.co.uk)
"It was a pleasure to work with Graham. He explained the process very clearly, prepared all the necessary computations and submitted the claims on our behalf. We are extremely delighted with the outcome and have no hesitation whatsoever in recommending Graham and his Company to others"
Sylvia Collins of the Huddersfield Light Opera Company
"I have been aware of Theatre Tax Relief for a few years now but the process of claiming the money was daunting. We didn't have the resources or the expertise to make the claim. Graham made the process of claiming Theatre Tax Relief very straight forward. He kept me informed of developments and answered all my questions. I provided him with information and he did the rest"
Shona Rattray, General Manager of the Hopscotch Theatre Company (https://www.hopscotchtheatre.com)
"Thanks so much Graham! You and Creative Tax Reliefs are the best. "
Ellie Claughton, Producer with Lung Theatre (http://lungtheatre.co.uk) and Barrel Organ (https://www.barrelorgantheatre.co.uk)
"For a small theatre company like us navigating Theatre Tax Relief was a daunting prospect. Having the support and expertise of Creative Tax Reliefs was absolutely brilliant. Graham explained everything and did a fantastic job sorting out the different projects we had been working on, calculated what we could claim and did all the leg work. The Tax Relief we received from HMRC helped us take our show to the Edinburgh Fringe, something we certainly couldn't have done without this extra funding. We would highly recommend Creative Tax Reliefs and will certainly be using them again in the future. "
Jasmine Cole of Jasmine Cole Productions
"When I first heard from Graham I have to say I was more than a little sceptical. Why had no one mentioned this to us before? The information seemed so monumental – shouldn’t it have been on the news? Within a few emails and phone conversations, we had provided all the information necessary and had everything thoroughly explained to us. Within two weeks we had received the tax credit into our bank account! Creative Tax Reliefs are amazing!"
Clare Molyneux, Artistic Director of Open The Door (Theatre in Education) C.I.C.
"When Graham first contacted us, we hadn’t heard of Theatre Tax Relief, which made us fairly wary. Graham took the time and care to explain it all to us and how the process would work. Initially, we were sceptical and worried about the time it would take for us to collate all the information needed for the claim. However, we needn’t have worried, Graham helped us every step of the way and made the process simple and quick. We would recommend working with Graham in an instant."
Fliss Green, Senior Strategy & Project Manager of Chain Reaction Theatre Company (https://www.chainreactiontheatre.co.uk)

CREATIVE TAX RELIEF UPDATES

 


We are delighted to welcome Colm and Neil to the team
We are delighted to welcome Colm and Neil to the team
Posted 22/10/2020

Creative Tax Reliefs is delighted to welcome Colm Seeley and Neil Adshead to the.....Read More

We have now claimed over £4 million of Creative Industry tax credits for our clients
We have now claimed over £4 million of Creative Industry tax credits for our clients
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New factsheets
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