R&D Tax Credits
What is the R&D tax credit scheme ?
Originally established to help small businesses, the R&D tax credit scheme was created to encourage home-grown innovation and stem the flow of UK companies relocating their R&D facilities abroad.
In 2002 a large company scheme was set up at a lower rate to reflect their higher revenues. This proved to be a problem for medium-sized companies who were classed under the initial scheme as a "large company" - and therefore excluded from the maximum rate.
Fortunately, the 2008 Budget saw the scheme definition of an SME expanded to include companies with up to 500 staff (rather than 250) and a turnover of up to 100 million Euros, allowing many more UK businesses to qualify as an SME and benefit from almost double the relief they were entitled to previously.
Small and Medium sized Enterprises
SMEs - with a tax credit enhancement rate of 175%, profit-making SMEs with a turnover of up to 100 million Euros and employing up to 500 staff* may be able to claim up to £22,500 for every £100,000 spent on qualifying R&D
The R&D Tax Credits are available to companies that are subject to UK Corporation Tax and have eligible R&D expenditure over £10,000.There are two tax credit schemes- one for Small or Medium Sized enterprises and one for Large Companies.
How do I Know if I'm a SME ?
EU Definition:In the 2006 Finance Act the SME definitions was expanded as is effective from August 1 2008:
- Employees: up to 500
- Turnover: 100m Euros
- P&L Account: 86m Euros
- Not owned (more than 25%) by an enterprise that is not a SME
How does the Scheme apply to me ?
- Two Years Back claims
- Rate 175%
Eligible Expenditure :
- Costs of staff directly involved in R&D
- Costs of Consumable or transformable materials employed directly in the R&D (inc. software, water, fuel, power costs)
- Subcontracting costs
What are the benefits of Alma ?
- Alma can maximize the claims (because we are technology and financial experts)
- Alma handle the claim from start to finish including dealing with HMRC so you never have to.
Large companies
Large companies - the tax credit enhancement rate for large companies is 130%, which means a large profit-making company exceeding the SME criteria* may be able to claim up to £9,000 for every £100,000 spent on qualifying R&D
*further criteria apply
The R&D Tax Credits are available to companies that are subject to UK Corporation Tax and have eligible R&D expenditure over £10,000. There are two tax credit schemes- one for Small or Medium Sized enterprises and one for Large Companies
How Do I Know I'm a large Co ?
EU definition: if you don't qualify as an SME.
How does the Scheme apply to me ?
- Two years back claim
- Rate 130%
Eligible Expenditure :
- Staffing costs
- Consumables
- Subcontracted workers- restrictions apply
- Externally provided workers
- Contributions to independent research
What are the benefits of Alma?
Complete Project management.
How we can help
Put simply, we manage the complex and time-consuming claim process from beginning to end until your relief is secured. And we only charge a percentage of the total claim if we're successful.
Our remuneration policy is particularly important for those unsure if their practices are eligible. After all, many qualifying activities - pure and applied research or experimental development - take place outside the traditional R&D department and are not obviously classified as R&D.
We can help you identify areas eligible for relief that may not have been previously considered - and you won't be charged unless there are real tax savings to be gained.
Of course, it is possible to make a claim yourself. But as well as demanding compliance with the Government's hefty 80-page regulation guideline, it's also vital to have a thorough understanding of both tax law and the complexities of the research project itself.
Failure to meet standards or accurately convey the technology in HMRC's language can result in a fine of up to 100% of the claim. This is why Alma's experience is invaluable. Combining scientific and tax expertise along with practical skills and industry knowledge, we have a 100% success rate because we know exactly what HMRC is looking for.
The Alma process
- Discovery - Detection of qualifying projects and calculation of eligible expenditure
- Documentation - Compilation and submission of tax claim and supporting information
- Defence - Assistance in financial audits