Let NX Accountants help you find out how your UK-based company can benefit from R&D tax credits
Claiming R&D tax credits incorrectly can leave your company open to penalties. Moreover, recent changes to the framework mean that there are different rules if you are claiming R&D tax credits for accounting periods beginning before 1 April 2024 and for accounting periods beginning on or after 1 April 2024. The claim is further complicated if you are doing research on behalf of another organisation.
So navigating your R&D credits claim can be difficult without expert help.
What are R&D credits?
R&D credits are a UK government scheme designed to drive economic growth by encouraging innovation. Essentially, the government is rewarding organisations for carrying out research and development in science and technology. Such R&D activities have benefits for the entire nation, so the UK government is keen to encourage innovation in the UK.
The R&D credits represent a tax rebate on a company’s corporation tax, or a reduction in the tax bill. This makes them a great source of funding for R&D, and ultimately, for the growth of your company.
Taking full advantage of the R&D credits to which your company is entitled will give you a competitive edge and allow you to harness innovation at a faster rate than others in your market.
Find out more about claiming R&D corporation tax credits from HMRC.
Claiming R&D credits doesn’t have to be difficult
The UK’s R&D credits scheme has seen some changes recently (May 2024), and the new framework may appear complicated at first sight.
Some organisations have put off claiming because of the complexity – but with an experienced R&D tax credit adviser on your side, claiming is not too onerous, and the cost of getting R&D tax credit advice should be covered by the savings you make.
NX Accountants’ R&D advisers are experienced at making these R&D credit claims and have a long-standing and up-to-date familiarity with HMRC’s regulations. They can help you claim more efficiently and effectively, so that the extra funds will be available to you soon as possible in the process. Using an experienced R&D tax credits adviser will take the frustration and uncertainty out of making your claim.
How can NX Accountants help your company claim R&D credits?
Our R&D adviser will take time to get to know your company. They can then:
- work out if you can claim R&D credits
- advise you as to what costs qualify for R&D credits in the UK
- support you in your application for R&D relief
- prepare R&D relief figures for your company’s tax return
The regulatory framework surrounding R&D credits has different rules for small and medium-sized enterprises (SMEs) and large companies. But don’t worry: NX Accountants’ R&D credits service can help you to ensure you are compliant with these variant rules. We can also help you to gather all the information you need to support your claim for research and development tax credits.
Finding out if you can claim R&D credits
HMRC has a stringent definition of what research and development is, and also who is qualified to say whether or not your activities are R&D. Every company’s R&D is different, and that’s why we take the time to get to know you and your company before taking on your claim. Once we know a bit about your activities, we can give you an honest assessment of your R&D credits claim.
Remember – to qualify for R&D tax relief, your project must seek an advance in a field of science or technology. The project also needs to have an aim of advancing the overall field, not just your own business.
You also need to let HMRC know before you claim your R&D credits on your corporation tax return.
Costs that qualify for R&D credits in the UK
You can claim relief from costs relating directly to your R&D activity, and you can also claim relief on qualifying indirect activities, that is work that is part of the project, but doesn’t directly contribute to resolving the question you are researching.
Examples of qualifying indirect activities are:
- scientific and technical information services
- security
- admin, finance, personnel and clerical work
- maintenance of equipment
- research at a university
If you are unsure about which of your company’s activities qualify for R&D credits, your R&D claim adviser can assist.
Letting HMRC know that you are making an R&D claim
Our R&D tax credit claims adviser will aid you in collating the information you need to submit ahead of your claim. This includes:
- the company’s UTR
- internal R&D contact as well as any agents involved in the claim
- accounting period dates
- summary of research activities
Your accountant will also work out your company’s claim notification period to ensure that you meet any deadlines for notifying HMRC that you plan to make a claim for R&D credits.
Bear in mind that HMRC’s website can slow down when it gets busy, so don’t leave your claim until the last minute.
R&D relief and your company tax return
The actual claim for R&D relief will be made on your corporation tax return. NX Accountant’s R&D advisers can prepare the information required for your tax return; or they can do it as part of their tax accountancy service. When you use a tax accountant you can rest assured that your tax computations are accurate first time.
Whether you are claiming enhanced R&D intensive support (ERIS) or claiming under the merged scheme, we will ensure your company is following due process. Once you’ve claimed your credit, you will need to use it to clear off any tax liabilities first, then the residue will be paid to your company. A tax accountant can help you ensure your company is compliant with the regulatory framework.
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