R&D Tax Credits

What are R&D Tax Credits?

Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation.

They are a valuable way for businesses to improve profits and can be used for any purpose, unlike many other government incentives.

How do R&D Tax Credits work?

Companies that spend money developing new products, processes or services, or enhancing existing ones, are eligible for R&D tax relief.

If you’re spending money on your innovation, you can make an R&D tax credit claim to receive either a Cash Payment and/or Corporation Tax reduction.

The scope for qualifying R&D is huge – in fact, it exists in every single sector. If you’re making a claim for the first time, you can typically claim R&D tax relief for your last two completed accounting periods.

Who qualifies for R&D Tax Credits?

The scheme applies to any sector. It occurs in everything from cheese-making to chemical engineering, and construction to digital development. To benefit from R&D tax incentives, you must:

  • Be a limited company in the UK that is subject to Corporation Tax.
  • Have carried out qualifying research and development activities.
  • Incurring costs on these projects, even if indirectly funded by a grant or client.

How EFM can help…

EFM works closely with a Hertfordshire based firm, with national coverage, alongside a team of specialist advisors covering the technical, financial and taxation aspects for R&D Tax Credits and Patent Box Taxation to help ensure your claim matters are handled effectively and in a timely manner. Speak to the EFM team for more information around our R&D services.

How can my business benefit by making an R&D Rebate Claim?


R&D Tax Credits for profit-making SMEs:
The R&D tax relief would enable a profitable SME to reduce the amount of corporation tax they pay on profits for the period, by the amount of the enhanced deduction at the relevant tax rate.

R&D Tax Credits for loss-making SMEs:
Where the additional enhanced R&D deduction is greater than the SMEs taxable profit (or the company already shows a tax loss) for the relevant accounting period, then this creates an R&D loss for corporation tax purposes.

The business owner can then decide between the following options:

  • Carry back the loss to the previous accounting period (if there was a taxable profit).
  • Carry the loss forward and offset against future profits.
  • Surrender the loss to another group company.
  • Surrender the loss to HMRC in return for a payable R&D tax credit at 14.5%

The overall effect is a 33% rebate on the costs incurred on the qualifying R&D.

Do I qualify for a claim?

Find out if your company is eligible for a claim by taking our free R&D Tax Credits healthcheck.

After completing this step by step assessment, you’ll receive an email indicating that your company qualifies for R&D Tax Credits and the next steps in the claim process.

For more information around our R&D Tax Credit services, contact the EFM team or call 01582 516300.

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