Our guide to R&D tax relief

The government provides approximately £5 billion/year in R&D tax relief credits to aid research and development within science and technology. This will result in a cash rebate, or a reduction in corporation tax payable to HMRC. R&D tax credits can be claimed by a range of companies, even if the project is unsuccessful. The incentive has increased in recent years to encourage UK innovation.  If you have undertaken or are thinking about embarking on a project that could potentially qualify for R&D tax relief, please read through our guide.

Research/project qualifying criteria

60,000 companies successfully claim R&D tax credits every year.  To make a claim, however, you must make a case that your project/research has addressed the following criteria:

  • Your company must be incorporated in the UK and subject to corporation tax.
  • It must seek an advance in either science or technology.
  • The project must have faced technical uncertainty
  • It must pose a problem not easily worked out by a professional in the field.
  • The project must research or develop a new process, product or service, or improve an existing one. This advance must also contribute to the overall field and not just your specific business.


Small and Medium Enterprise (SME) R&D Relief

The overall deductions available for R&D relief is 230% (the usual 100% deduction plus an extra 130% of qualifying costs from the yearly profit).

SMEs making a loss can also claim tax credit worth up to 14.5% of the surrenderable loss.

The increase in R&D tax relief for SMEs in recent years has made the prospect of completing R&D work and claiming credits much more valuable.

SMEs must

  • Have less than 500 staff
  • Turnover under 100 million euros or a balance sheet under 86 million euros.

We are here to help

R&D tax credit applications are long and complicated and if filed incorrectly can lead to a HMRC enquiry which could push back your claim by up to 6 months. Therefore, it’s usually recommended that you seek help from a professional to avoid mistakes and help you claim everything you’re eligible for. This is something we may be able to support you with at Love Your Accountants.

we specialise in R&D tax credits and have a strong awareness of what HMRC want to know when making an R&D claim.

What happens after my application is submitted?

HMRC aims to process each claim within 28 days although it can take longer. It will then take 20 days from when it is processed to receive your money.

If you have any more questions, get in touch with your main point of contact at LYA.

Not a current client? Not a problem. Fill out our contact form or ring +44 (0)1372 374143 today to find out how we can help you.