R & D Claims
Overview
Research & Development (R&D) tax relief helps innovative companies undertaking R&D claim a generous corporation tax deduction or cash refund from HMRC.
What activities qualify as R&D?
To receive R&D Tax Relief you need to ensure that you have carried out an R&D project which meets the government definition for tax purposes and have incurred qualifying costs on this project.
HMRC qualify research and development as overcoming technological and scientific uncertainties or challenges; aiming at achieving a technological and scientific advance that couldn’t be easily worked out by a professional in the field.
Whatever size or sector, if your company is taking a risk by attempting to resolve these uncertainties, then you may be carrying out qualifying activity. This could include creating a new process, product or service or improving on an existing one.
To claim R&D relief projects must meet all of the following criteria:
- aims to create a scientific or technological advance in the overall field
- has or has tried to overcome scientific or technological uncertainty
- the uncertainties could not be easily worked out by a professional in the field
In our experience, claims are often overlooked because business owners over-estimate the level of innovation required to claim. Contact us for a free assessment.
Innovate UK
Innovate UK (IUK) is the UK’s innovation agency. It provides government grant support to UK businesses to support innovative activities which drive competitive advantage, develop new products/services and in some instances overcome Covid stimulated challenges.
If your business is interested in taking advantage of the government grant support available and would benefit from support and assistance from an IUK experienced organisation please get in touch with us.
Innovate UK administration and claims management can be very intensive. Compiling the technical reports and financial documentation required for your project to qualify for an acceptable claim can be quite a daunting task. Understanding what’s needed by the Monitoring Officer may be something that you have not had to deal with before.
We have a highly experienced team who are able to guide and support you throughout the setup of the project and the preparation & submission of claim documentation. We can also help to prepare the project for reviews with your Monitoring Officer – all ensuring the claim is processed quickly and you get the cash into your account as soon as possible after the reporting period.
Read about the latest Round of Smart Grants
The latest opportunity for UK registered organisations to apply for a share of up to £25million is now open for applications. Applications must be submitted by 11am on Wednesday 17 January 2024.
For further information click here.
Scope
Your proposal must demonstrate:
- a clear game-changing, innovative and/or disruptive and ambitious idea leading to new products, processes or services
- an idea that is significantly ahead of others in the field, set for rapid commercialisation
- a strong and deliverable business plan that addresses (and documents) market potential and needs
- a clear, evidence based plan to deliver significant economic impact, return on investment (ROI) and growth through commercialisation, as soon as possible after project completion
- a team, business arrangement or working structure with the necessary skills and experience to run and complete the project successfully and on time
- sound, practical financial plans and timelines
- awareness of all the main risks the project will face (including contractor or equipment failure, recruitment delays, etc) with realistic management, mitigation and impact minimisation plans for each risk
- clear, considerable potential to significantly impact the UK economy and/or productivity in a positive way
Innovate UK give preference to applications that demonstrate realistic, significant potential for global markets.
Proposals from innovation-based businesses with significant ambition and potential for growth or scale-up are welcome.
Where possible, projects should take customer and user needs into account to deliver more desirable and useful solutions.
Innovate UK will fund innovative research and development (R&D) projects across a variety of technologies, markets and research categories, including:
- feasibility, including market research
- industrial research
- experimental development
Eligibility
To lead a project you must:
- be a UK based business of any size or a research and technology organisation (RTO)
- carry out your project activity in the UK
- intend to commercially exploit the project results from or in the UK
- be an SME if you want to work alone
- include at least one SME if you are a large business or RTO and wish to collaborate with other businesses, research organisations, public sector organisations or charities (grant support is more generous for SME led bids)
Academic institutions cannot lead or work alone but may be a useful partner to have in the team.
Single applicants must claim funding. If the project is collaborative, the lead and at least one other organisation must claim funding and enter your costs as part of the application.
To collaborate with the lead organisation you must:
- be a UK based business, academic organisation, charity, public sector organisation or RTO
- carry out your R&D project activity in the UK
- intend to commercially exploit the project results from or in the UK
- be invited to take part by the lead applicant
Funding Costs
Innovate UK have allocated up to £25 million to fund innovation projects in this competition.
For feasibility studies and industrial research projects, you could get funding for your eligible project costs of:
- up to 70% if you are a micro or small business
- up to 60% if you are a medium-sized business
- up to 50% if you are a large business
For experimental development projects which are nearer to market, you could get funding for your eligible project costs of:
- up to 45% if you are a micro or small business
- up to 35% if you are a medium-sized business
- up to 25% if you are a large business
Patent Box
Overview
Introduced in 2013, the scheme is administered by HMRC and is designed to reward innovative UK companies by allowing them to apply for a lower rate of corporation tax to profit from patented inventions.
The UK Patent Box is a very generous, but under claimed relief. If successful, a 10% corporation tax is applied rather than the standard 19% tax rate.
This lower rate of corporation tax can be claimed in addition to R&D tax credits. Here at Meacher-Jones we can help process both claims on your behalf.
What activities qualify
To benefit you need to be a UK limited company paying UK corporation tax and be able to show that you’ve made a profit from qualifying patented inventions.
Patents must have been granted by the UK Intellectual Property Office or the European Patent Office, together with administrations in some other qualifying European territories.
How to claim
An election into the Patent Box regime must be made by the company within two years after the end of the relevant accounting period in which relief is claimed.
A company can elect in early, before a patent has been granted, to enable the company to claim tax relief on qualifying profits generated in the period from filing the patent application and the patent grant – the patent pending period. The accumulated relief is claimed in the tax return for the year the patent is granted.
To find out if you could be benefit please get in touch and we will talk you through the process.
With help through every step of the R&D claim we managed to achieve a substantial sum of return which helped in inward investment. We didn’t have the time or skills to achieve this ourselves. Thanks to everyone @ Meacher-Jones.
If you are considering making an R & D claim I would say it’s essential to work with an expert such as Meacher-Jones, because their knowledge of the scheme and our industry was invaluable in achieving a successful claim.