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Direct: 01792 410110 Mobile: 07557 [email protected]

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R&D Tax Relief

25th June 2014


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•Benefits of the R&D Tax Relief Schemes

•What is R&D for Tax Purposes?

•Categories of Qualifying R&D Expenditure

•Potential Lost Opportunities

Areas to be covered


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Benefits of the R&D Tax Relief Schemes


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Enhanced R&D Tax Deduction• Extra (>100%) tax deduction for companies on total volume of qualifying revenue R&D expenditure

SME scheme:

- 75% enhanced tax deduction prior to 1 April 2011

- Increased to 100% from 1 April 2011

- Increased to 125% since 1 April 2012

Large company schemes:

- 30% enhanced tax deduction

- “Above the line” R&D expenditure credits introduced for expenditure incurred since 1 April 2013


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Tax Free Cash Receipt• Actual tax free cash receipts may be claimed

SME scheme – Loss making companies:

- Approximately 25p in the £ prior to 1 April 2014

- Increased to approximately 33p in the £ since 1 April 2014

PAYE/NIC cap was removed for accounting periods ending on or after 1 April 2012

Large company schemes – Companies without an outstanding tax liability:

- Approximately 8p in the £ since 1 April 2013

PAYE/NIC cap applies under large company schemes


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Tax Free Cash Receipt (cont.)•Hence, for expenditure incurred since 1 April 2013 ALL companies can potentially claim actual tax free cash from HMRC. This includes:

- Large companies;

- SMEs who have received grant funding; and

- SMEs who are carrying out R&D activities for another qualifying person


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What is R&D for Tax Purposes?


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• Has your company, or a company you act for:

Developed a new or improved product or process (or attempted to) during the last few years?

If the answer is yes (or maybe), the company could have undertaken qualifying R&D activities

• To qualify the work should be a:

- Puzzle

- Conundrum

- Challenge

- Problem


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Categories of Qualifying R&D Expenditure


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1. Staffing costs

2. Contracted out R&D activities

3. Externally Provided Workers (for instance, agency workers)

4. Consumables

5. Computer software

6. Power, fuel and water

7. Payments to the subjects of clinical trials


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Potential Lost Opportunities


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• Not realising the company is undertaking qualifying R&D activities

• Not realising certain projects and/or activities qualify as R&D for tax purposes

• Believing the receipt of a grant prevents the company from making an R&D claim

• Believing the receipt of a grant by an SME prevents the company from making an R&D claim under the SME scheme for any of its activities

• Not claiming R&D relief for certain activities that might be deemed to be production by some

• Not claiming relief for Qualifying Indirect Activities

• Not making a claim on the basis it is thought that it would be too onerous a process

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