Research and Development (R&D) Tax is no longer just available to those who are developing cutting edge innovation. It is now applicable to a much wider range of industries and situations that you may be able to make a claim and save some significant amounts of tax.

Research and Development expenditure is a government incentive to encourage businesses to invest in improving their products or their business. 

A successful claim reduces the Corporation Tax a business pays. For example, a profitable business which spends £100k on qualifying R&D expenditure can secure total tax relief of up to £46.5k, compared to just £25k on other expenditure. Loss making companies may also be able to receive cash payments from HMRC. Any business who is developing systems, processes or products can potentially make a claim. 

New rules have come into effect from 1 April 2023 which can add complexity, but relief can still be utilised where appropriate.

The key is to think of the tax relief as an incentive for ‘IDEAS’ that you come up with which help you to improve the business efficiency, for new products and services, or potentially just to improve profitability.  So what sort of costs can be included? 

  • Employee costs and subcontracted costs (the latter restricted by 35%) for time spent on R&D matters. 
  • Materials – Consumable or transformable materials, that are used in product design etc. 
  • Utilities – Premises based costs such as power, water, fuel etc. Based on the space used for R&D activities.
  • Software – Computer software used directly in the R&D processes. 

This list is much longer, and will vary for each type of business, so try not to make any assumptions about what will and will not qualify. For example, in our property construction clients we might consider…

  • Overcoming site or conservation issues.
  • Developing or using new or “greener” products. 
  • Improving building methods or techniques. 
  • New energy saving techniques.
  • Improving site safety. 
  • Creating, or experimenting with, new materials.
  • Integrating new or improved technology into buildings.

The key is that many businesses are already doing these things as part of improving and developing their business. Problem solving is an everyday issue for most clients, but careful analysis of the spend, a clear description of the work done and the objectives and benefits may often lead to a much greater tax saving on money you have already spent.

 

Here’s a case study to show how we helped a groundworks company claim a tax saving of over £80,000! 

How we can help you.

As experienced, qualified accountants and tax specialists, we deal with the subtleties of tax day-in, day-out. Our detailed understanding of the system means we can keep your tax liability to a minimum while playing strictly by the rules. Every claim is managed by an experienced consultant who advises you on the entire process. Our specialists are confident in the work they undertake, which is why we are happy to carry out a review and you only pay us based on the benefits and the tax we save. 

How much does it cost?

We can work on a fixed price fee for the claim, or a percentage of the tax savings achieved, you can choose. A phone call will usually enable us to give a good indication of whether a claim might work for your business, before we start getting into the detailed work or agreeing the basis on which we are paid. There is nothing to lose by making a claim.

Examples of R&D claims we have done for clients: 

  1. A print production and wrapping company developing high quality, environmentally friendly packaging solutions as opposed to traditional polythene wrapping. Their innovation has reduced their single-use plastic consumption by 100 tonnes (minimum), without compromising on quality or strength. Tax saving of £311.8k.
  2. Construction Companies using innovative building methods to solve unique problems due to the site, property or locations, as well as techniques to improve energy efficiency. Tax Saving £171.2k.
  3. A London based beer brewery company is constantly evolving and updating its own-brand recipes with tweaks, trials and experimental brews. Tax saving of £32k.
  4. A large dairy secured R&D tax relief on costs incurred researching and testing how to extend the shelf life of their products. Tax saving of £20k.
  5. An Electrical Contracting company developing new techniques and bespoke solutions to overcome problems encountered on project installations and designing innovative installations with new technology. Tax Saving of £62.6k