We’ve put together one place to find out about Research and Development (R&D) tax reliefs and how they can help your business.
You can jump ahead to the sections you’re most interested in, using the links below:
R&D reliefs support businesses that work on innovative projects. The reliefs are designed to encourage innovation and are a valuable source of cash for businesses to invest in accelerating their R&D, hiring new staff and ultimately growing.
Many businesses don’t realise that they qualify for R&D relief, or they are not claiming their full entitlement. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
R&D tax reliefs are only available for limited companies – sole traders and partnerships do not qualify. Companies claiming R&D reliefs must be able to demonstrate:
What type of R&D relief you claim will largely depend on the size of your business.
Most of the claims we deal with come under the small and medium-sized enterprises (SME) R&D Relief.
You can claim SME R&D relief if your:
SME R&D relief allows you to:
If you’re a large company, have been subcontracted by a large company or have received a government grant – you could qualify under a different scheme – the R&D expenditure credit. If you think this may apply to you, we will look at what scheme is best for you to claim under, please chat to us.
According to HMRC’s latest R&D report, the average claim made by owner-managed businesses in the UK is £53,876. We’ve seen clients re-invest this in different ways to grow their businesses. You can:
Give your cashflow a boost at a time when you need it most
Implement new technology to increase speed and efficiency
Hire additional members and add expertise to your team
Up-skill your team by investing in training and development
Invest in sales and marketing to accelerate your growth
You and your team work really hard. How about rewarding yourself?
Working with Wow will significantly increase your chances of a claim being successful. We have a dedicated team that have a 100% record of claims being accepted by HMRC. We’ll also increase the value of any claim you make by:
Have a chat to Rory to see how we can help you
Chris Gunn, Co-Founder & Managing Director of LoveGunn, an award-winning branding and design agency, initially ruled LoveGunn out of being able to R&D reliefs until we had a conversation with him. Here’s what he had to say about working with Wow on his R&D claim.
Here are the steps we go through for a typical R&D claim
A no-obligation chat to figure out if R&D is applicable for your business
We've got a template to make this really easy for you. If you're a Wow client, we have most of this to hand already so can do this for you
You'll receive an estimate of the tax relief a successful claim would give you and we'd put together a proposal for the work we will do
Depending on your preference and size of the claim we'll either come to see you, have a video call or we may just need you to fill out a few more questions to get together the information on the project you're claiming for
We'll put together your R&D report based on all the information you've shared with us
We'll update your Corporation Tax return to reflect your claim, attach the R&D report, and then send it to you for signing
Once your Corporation Tax return is signed, the return and R&D claim is submitted to HMRC
HMRC quote 28 days to process R&D claims and repay any tax reliefs, however, we found it often takes longer, typically around three months. We will keep in contact with HMRC throughout the process and keep you updated
The funds are repaid by HMRC into our Wow client account and we transfer these to you (minus the agreed success fee). You don't pay us if the claim is unsuccessful
Below we’ve listed some common projects and sectors that qualify.
If you find yourself in the position that you are still paying your team (not furloughing them), but you are short on new client work, you could consider getting your team to focus on new R&D projects.
Think about the things in your business you’ve wanted to develop for a long time, but keep deprioritising. Now’s a perfect time to pick them up. It could be:
Putting time into these projects now not only makes good use of your time or unexpected capacity, but it will also reap financial rewards for you further down the line. For every £1,000 you spend on a qualifying R&D project, you could receive anywhere from £250 £330 in additional future tax relief or tax rebates through an R&D claim. This could significantly improve your financial position in the future.
If you have received any grants or loans – like the CBILS loan, this could impact your R&D claims. Factors such as grants can restrict a small business from accessing the SME incentive. You can still make a claim using the RDEC – scheme or via both incentives. However, it’s likely the relief you receive won’t be as high.
If you have received any grants or loans, we recommend keeping the money in a separate account and only drawing on it if necessary. Also, if possible, only spend any grants or loans on costs that don’t contribute to any R&D projects. If you think this could impact you, have a chat with us, and we can take you through your options.
Book a call at a time that suits you