R&D Claims
Can you Claim SME R&D tax credits?
R&D tax credits provide a valuable cash boost for companies that successfully claim them for their research and development efforts.
Smaller businesses, in particular, can benefit from this financial support, with those applying through the SME scheme receiving a higher rate than those on the RDEC scheme.
The tax relief gained can be reinvested into the business—whether to fund further R&D innovation or upgrade company facilities with new machinery or equipment.
To estimate your potential claim, please contact us.
How is the R&D SME Scheme Changing in 2024?
From 1 April 2024, the SME and RDEC schemes will merge for accounting periods starting on or after this date, bringing significant changes to R&D tax credit claims.
Key updates include:
- A unified rate and set of rules, with a post-tax benefit ranging from 14.7% to 16.2%
- Expanded qualifying rules for subcontracted and subsidized R&D, previously limited to RDEC
- Lowered R&D intensity threshold for loss-making SMEs, reducing from 40% to 30% of total expenditure
- New restrictions on overseas R&D costs
Introducing the SME Intensive Scheme
From 1 April 2024, the SME and RDEC schemes will merge, establishing a single 20% rate and a unified set of rules. However, loss-making SMEs classified as R&D intensive—those spending over 30% of their total expenditure on research and development—will benefit from an enhanced 27% R&D tax credit.
Previously, the threshold for R&D-intensive classification was 40% of total expenditure, but this has been lowered to 30% as of April 2024.
Is Your Business Eligible for the SME R&D Tax Relief Scheme?
To qualify for SME R&D tax credits, your business must:
- Have fewer than 500 employees
- Generate a turnover of under €100 million (£85 million) or have a balance sheet total below €86 million (£73.59 million)
Linked and partner enterprises are factored into these totals and can impact your SME status. Eligibility is also influenced by the voting rights your business holds in other enterprises, as well as external voting rights in your company.
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What Can Be Claimed as R&D Tax Credits for SMEs?
Under the SME R&D scheme, small businesses can claim Corporation Tax relief on projects that meet the government’s definition of research and development.
Projects may qualify for SME R&D tax credits if they meet the following criteria:
- They achieve advancements in a specific field.
- They involve scientific or technological uncertainty.
- Your business actively worked to overcome this uncertainty.
- A professional in the field could not easily identify a solution.
How Do I Claim SME R&D Tax Credits?
SMEs can claim R&D tax credits by submitting a Company Tax Return via GOV.UK. Claims can be made for up to two years after the end of the accounting period in which the R&D expenses were incurred.
While the process can be complex, randd has a team of specialist consultants who can maximize your claim and simplify the submission process.
What Can’t Be Claimed as SME R&D Tax Credits?
Although R&D tax credits cover a wide range of activities—many of which business owners may not initially recognize—there are some exclusions.
R&D tax relief does not cover:
- The cost of land
- Capital expenditure
- Production and distribution of goods and services
- Payments related to patents and trademarks
What Can Be Claimed as R&D Tax Credits for SMEs?
Under the SME R&D scheme, small businesses can claim Corporation Tax relief on projects that align with the government’s definition of research and development.
To qualify for SME R&D tax credits, a project must:
- Contribute to advancements in a specific field.
- Involve scientific or technological uncertainty.
- Show that your business made efforts to overcome this uncertainty.
- Demonstrate that a professional in the field could not easily find a solution.
Who Is Eligible for Advance Assurance?
Businesses applying for R&D tax relief under the SME scheme for the first time may be eligible for advance assurance, a voluntary scheme that provides a guarantee for an R&D claim.
To qualify, an SME must:
- Have a turnover of under £2 million
- Employ fewer than 50 people
- Not have previously claimed SME R&D tax credit relief
How ElanTax.com can help
Unlike most accountancy practices, at ElanTax.com have access to a specialist team to process your SME R&D tax credit claim. Their role is to undertake the considerable research needed to ensure all boxes are ticked in the mission to maximise the amount of tax relief you receive.
The specialist have the knowledge and expertise, built up over more than 15 years in this industry, to identify and include every R&D activity that qualifies for inclusion within a claim. Hundreds of millions of pounds have been claimed back as a result of their simplified, efficient procedures.
With input from your business, we will compile a detailed technical report. That is the all-important document which explains the SME R&D tax credit-compliant activities undertaken by your company, the scientific or technical challenges the R&D addressed and how existing legislation was adhered to.
The specialists have an unparalleled claim success rate as well as a proven track record of recouping up to NINE times more R&D tax relief than an accountant, alternative agent or a self-submission claim would. An indicative figure for how much your claim could be worth can be obtained from us.
To enquire about how ElanTax.com can help you with your SME R&D tax credit claim, call 020 7 403 1500
