Crowthers are specialists in the preparation of claims for research and development (R&D) Tax Relief. We believe in ensuring that R&D Tax Relief claims are done right with the goal of submitting compliant claims that maximise the funding available to you.
Our expert team, led by Sara Crowther, can guide your company through every step of the R&D tax relief claim process. With over 15 years’ experience in R&D Tax Relief claims, Sara runs a dedicated R&D tax relief department assisting numerous clients each year. As a Chartered Tax Adviser and regular speaker at professional tax events, Sara offers in-depth knowledge of the ever-changing R&D tax regime. Sara also holds a Law degree from the University of Nottingham, invaluable for strengthening enquiry defence reports.
Since 2008, Sara has assisted numerous clients across diverse industries to file R&D claims and maximise tax savings. Her specialised team guides businesses through every step of the process, helping capture all eligible costs and craft robust technical submissions. Sara leads by example, known for her diligence, professionalism and dedication to excellent client outcomes.
Our tailored service takes the hassle out of filing claims:
- We work closely with your science and technical teams to gather the necessary information. This includes conducting a thorough review of your projects to help you identify those that meet HMRC’s eligibility criteria.
- We write robust, yet airtight reports that justify your projects’ merit, in line with HMRC’s guidance.
- We meticulously analyse finances to capture all qualifying R&D expenditure, providing clarity on uncertain areas. We work with you to apportion the relevant expenditure across the qualifying projects and to maximise the financial impact of your relief or credit across your company or group.
- We handle any HMRC queries to avoid adjustments to your claim.
- Our team remains up-to-date with the frequent changes to legislation to ensure your claim is robust and compliant.
With our specialist expertise, best practices and experience helping numerous (happy) clients secure substantial R&D tax relief awards, we can guide you through a seamless yet fully compliant claim preparation process that maximises available funding for your innovative work.
Contact Sara Crowther (Director) or Madalina Matei (Manager) to discuss how we can assist your company in accessing the full R&D Tax Relief funding you deserve.
What is R&D tax relief?
Research and Development (R&D) Tax Relief is a UK government initiative to encourage innovation. Launched in 2000, the scheme offers corporation tax relief for companies carrying out qualifying R&D projects.
To qualify for R&D Tax Relief, your company must be registered in the UK, liable for corporation tax, and have carried out research and development work that meets HM Revenue and Customs’ (HMRC) definition of eligible R&D. This includes projects aimed at advances in science or technology through the resolution of scientific or technological uncertainties. Claims can be made for up to two years after the end of the accounting period in which the R&D expenditure was incurred.
R&D Tax Relief consists of two schemes: R&D Tax Relief for Small and Medium-sized Enterprises (SMEs) and the Research and Development Expenditure Credit (RDEC). Both schemes are available to companies across a wide range of industries, from food science to chemical products and processes, nanotechnologies to aerospace, construction to automotive, computer science to biomedical technologies.
Which R&D Tax Relief scheme is right for your company?
The key factor in determining whether you should apply for R&D Tax Relief for SMEs or Research and Development Expenditure Credit (RDEC) comes down to your company’s size, as shown in the following table:
|
Criteria |
SME R&D Tax Relief |
RDEC |
|
Company size |
Fewer than 500 employees AND annual turnover less than €100 million AND total balance sheet less than €86 million |
Over 500 employees AND annual turnover over €100 million AND total balance sheet exceeding €86 million |
|
Company is part of a larger corporate group |
N/A |
✔️ |
|
Received grant funding or subsidies |
N/A for state-aid grants.
For de-minimis funding, only the value of the grant falls within the RDEC scheme, the remainder qualifies for the SME scheme. |
✔️ |
|
Been subcontracted to carry out R&D |
N/A |
✔️ |
In some cases, different R&D projects within your business may qualify for different schemes. For example, if one project received grant funding, you may need to split your claim between the SME relief for other projects and RDEC for that particular project.
Key considerations in estimating your R&D Tax Relief
The total eligible R&D expenditure incurred significantly determines potential relief. The greater a company’s investment in qualifying R&D activities, the larger the potential claim.
For R&D expenditure incurred since April 2023, the SME R&D tax relief allows companies to:
- Deduct an extra 86% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total of 186% deduction.
- Claim a payable tax credit if the company has claimed relief and made a loss, the payable credit is worth up to 10% of the surrenderable loss or 14.5% for R&D intensive companies.
Before April 2023 the tax relief was more generous as the SME R&D tax relief allowed companies to:
- Deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total of 230% deduction.
- Claim a payable tax credit if the company has claimed relief and made a loss, the payable credit is worth up to 14.5% of the surrenderable loss.
RDEC gives a tax credit currently worth up to 20% of R&D expenditure (10.5% before April 2023).
Substantiating your R&D Tax Relief Claim
To receive R&D tax relief, HMRC will want evidence that your project:
- Looked to take an advance in a field of science or technology – Your work sought to push the boundaries of knowledge or capability within an overall field of science or technology, not just provide commercial benefit. The process, product or service can still represent an advance even if another company has developed it but it is not publicly available.
- Had to overcome a scientific or technological uncertainty – Experts in the field could not determine if the goals were feasible or how they can be achieved based on existing evidence, showing a gap your work aimed to fill.
- Involved trying to overcome the identified uncertainty – To tell HMRC how you tried to overcome the scientific or technological uncertainty, you should show that the R&D needed research, testing and analysis. You need to be able to explain the work you did to overcome the uncertainty.
- Could not be easily worked out by a competent professional in the field – Explain why an expert in the relevant field could not have easily resolved the uncertainty and achieve the advance and highlight any previous failed attempts by other professionals to solve the same problem.
What costs can I claim on?
The following table shows the types of expenditure that you can claim R&D tax relief on:
|
Cost category |
SME R&D Tax Relief |
RDEC |
|
Consumable items, including fuel, materials, power, and water |
✔️ |
✔️ |
|
Payments made to volunteers involved in clinical trials for R&D projects in the pharmaceutical industry |
✔️ |
✔️ |
|
Data licence costs and cloud computing costs (for accounting periods beginning on or after 1 April 2023) |
✔️ |
✔️ |
|
Externally provided worker costs (65% of the relevant payments if not connected, 100% if connected) |
✔️ |
✔️ |
|
Staff costs, including salaries, wages, pension fund contributions, and secondary Class 1 National Insurance contributions paid by the company. This includes staff involved in qualifying indirect activities, such as HR used to recruit R&D staff. |
✔️ |
✔️ |
|
Software licence fees for R&D and a reasonable share of the costs for software partly used in R&D activities |
✔️ |
✔️ |
|
Subcontractor costs (65% of the relevant payments if not connected, 100% if connected) |
✔️ |
❌ |
|
Contributions made for independent R&D |
❌ |
✔️ |
|
Expenses related to the production and distribution of goods and services |
❌ |
❌ |
|
Capital expenditure |
❌ |
❌ |
|
The cost of land |
❌ |
❌ |
|
The cost of patents and trademarks |
❌ |
❌ |
|
Rent or rates |
❌ |
❌ |
