What Are R&D Tax Credits

Research and Development (R&D) tax credits is a tax incentive scheme that rewards UK businesses for innovation. R&D tax credits provide a valuable source of income to innovative businesses, as they can reduce their tax bill or claim payable cash credits as a proportion of their R&D expenditure.  The Government’s support for R&D is available to most sectors including: Construction, Technology & Software, Manufacturing & Engineering, Telecoms, Food Processing, etc.

There are currently two schemes to reward innovative businesses within the UK: the SME regime for small and medium enterprises and the Research and Development Expenditure Credit (RDEC) regime for larger organisations. Depending on which category your business falls under, the benefits available will differ.

Does my business qualify?

In order to qualify for R&D tax relief you must:

•     Be a limited company within the UK, subject to Corporation Tax;
•     Have developed new products, processes or services; or
•     Have tried to improve existing products, processes or services;
•     Have sought to overcome a scientific or technological uncertainty;
•     Have spent money whilst developing them.

How much can I claim?

The scheme in which you use to claim R&D tax credits will heavily depend on whether the company is classified as an SME or a large company. A business is classified as an SME if they have a staff head count of less than 500 and either a turnover of less than €100m or gross assets not exceeding €86m.

A loss making SMEs can claim up to...

A profit making SMEs can claim up to...

A large company can claim up to...

(tax credits are a percentage of total qualifying expenditure)

Construction

R&D

is on the rise

The latest statistics published by HM Revenue Customs reveal that the number of R&D claims made on behalf of the construction sector has elevated in the last year. A total number of 3055 R&D claims were made last year, compared to 1790 the year before, a rise of 71%. There was a total payout of £175m in the form of tax credits to the construction sector last year, which was almost double £90m paid out the year before. These figures clearly demonstrate that construction R&D is on the rise. However, the R&D intensity does not match the number of firms within the UK. With over a quarter of a million firms all over the UK, and the construction sector only representing 6% of all claims in the R&D scheme. Eugene O’Neill, Managing Director of Inspired Tax Incentives says “while R&D claims in the construction sector may be on the rise, there are still many construction companies failing to benefit from the scheme and potentially missing out on substantial tax credits.”