R&D TAX CREDITS EXPLAINED

If your company is driving innovation through projects in the science and technology industry, you could be eligible for R&D tax credits.

R&D tax credit calculation and eligibility can be complex, but they’re essential to make sure your business can stay ahead of the game. Read on to see if your business could be eligible, or use our simple R&D calculator to discover what funding your business could be owed.

R&D tax credits eligibility: what projects count?

The government understands that for businesses to dedicate valuable time and effort into research and development, not only must they be incentivised to do so, there must also be financial backing to ensure innovation is possible. That’s where R&D tax credits come in.

If that sounds incredibly vague, that’s because the government made them intentionally available in a variety of businesses and sectors, of all shapes and sizes. That’s great for increasing your likelihood of getting R&D tax credits, but not so good for working out if you’re eligible.

To qualify, you’ll need to explain how your business’s project has:

  1. Looked for an advance in the science or technology sector
  2. Overcome an uncertainty
  3. Tried to overcome this uncertainty; and
  4. Worked out something that couldn’t have been easily done by a professional in the field

What’s good about R&D tax relief is that you can claim them for:

  • Upcoming projects
  • Completed projects
  • And even projects that were unsuccessful

That means even if your research and development didn’t turn out how you expected, your business won’t necessarily be out of pocket.

If that’s enough to know you’re eligible, then use our simple R&D calculator to see what you can get. Otherwise, keep going for more information.

R&D tax credit calculator

What is your financial position?
Loss Making
Profit Making
What is your estimated R&D spend this year?
Revenue expenditure includes the following costs which can be included in your R&D claim: staffing costs, subcontracted R&D, externally provided workers (EPWs), consumables, software, payments to the subjects of clinical trials.
You could get up to
Get Started

We can calculate and prepare your claim.

Get Started

What’s considered R&D?

Above, we touched on some of the things your project must do to qualify for R&D tax credits. Here, we break down those requirements in more detail.

R

Looking for an advance in the science or technology sector

It’s important to note that the advance doesn’t apply to your business: it must be a new advance in the overall industry. That means you can’t claim R&D relief for something that’s been used elsewhere but for the first time in your industry.

Overcoming an uncertainty

You must show that there’s an uncertainty in this industry and legitimate attempts to overcome it. This could involve an industry expert explaining how it’s impossible to overcome a technological or scientific uncertainty, despite using all the evidence available.

Trying to overcome an uncertainty

You must demonstrate that your R&D project needed research, testing, and analysis. This could simply be a description of what worked and what failed.

Working out something that couldn’t have been easily done by a professional in the field

This could be by showing how an industry expert’s attempts haven’t worked. Sometimes, this could involve professionals explaining the uncertainties involved and other failed attempts.

What costs can you claim R&D tax credits for?

Naturally, you can’t claim R&D tax credits for just any cost related to your project’s research and development. Here’s what qualifies as R&D tax spend.

Staff costs

For any staff working directly on your R&D project, you can claim back a percentage of their salary, wages, national insurance contributions, and pension contributions.

Externally provided workers and subcontractors

Sometimes, it might be necessary to source extra workers to help with your R&D project. You can claim a percentage back of the costs associated from hiring extra workers, but only from certain institutions or those employed through specific agencies. We can figure out which of your workers qualify for R&D relief.

Staff provider costs

To get the best workers for your R&D project, it might be necessary to use a recruiter or employment agency. The workers must be directly involved in your project.

Consumable items

Certain items consumed in the R&D process can be claimed for, such as prototypes and test materials.

Utility costs

You can claim back a percentage of the costs incurred from using any heat, water, and electricity for your R&D project.

Software costs

Some of the computer software used in your R&D project can be included in your R&D spend.

WHAT ARE THE TYPES OF R&D RELIEF?

The types of R&D relief that may be available to your business depends on its size.

Most businesses will fall under Small- and Medium-Sized Enterprises (SME). For SMEs to qualify for R&D tax credits, they’ll need to have:

  • Fewer than 500 staff; and
  • A turnover of under €100 million, or a balance sheet total of under €86 million

If your SME qualifies for R&D tax relief, your company will be able to:

  • Deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction
  • Claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss

If your business is larger than this and earns more, you’ll need to apply for Research and Development Expenditure Credit.