R&D tax relief and credits are a blessing for businesses that invest in innovation. Certain types of projects and expenditure can be listed on R&D tax claims. We’ve summarised these below, so you can confidently discover if you’re eligible.
There are two basic criteria you need to satisfy to meet HMRC’s definition of an R&D project:
When submitting your claim to HMRC, you’ll need to provide enough detail so that they can easily understand if your project qualifies as R&D.
State the advance in your claim, rather than the process, product or functionality being developed. It’s a good idea to show how you tried to solve an uncertainty and outline any successes or failures.
If you receive a grant or subsidy, you can still claim Research and Development expenditure credit (RDEC).
It’s unlikely that you’ll be able to claim SME R&D relief because it qualifies as ‘notifiable state aid’;
the same project can’t receive this more than once.
The provider of your grant or subsidy will be able to tell you whether it is classed as notifiable state aid or not.
If it is but you have expenses that aren’t covered by the funding, you can claim SME R&D relief on these.
You can claim staff costs, like salaries, Class 1 National Insurance and pension fund contributions. Under the RDEC scheme, subcontracted R&D generally can’t be claimed, but 65% of it can with SME R&D relief. Additionally, consumable items, software, clinical trial volunteers, and prototypes purely built to test R&D, can be claimed.
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