Research & Development Tax Credit

Research and Development tax relief for SMEs

Research & Development, or R&D, is what companies carry out to gain new knowledge so that they can create, implement and review new products, services, and processes.

For many companies, it’s an essential part of their work, especially in the earlier stages of developing or creating something new, as it often allows them to gain a competitive advantage over others in the industry. However, it can also be a financial risk – especially if your project doesn’t work out the way you had hoped. This is where R&D tax credits can help.

If your business is spending money on research and development, you could be eligible to claim R&D tax credits.

Gorilla’s ongoing accounting and tax service work alongside the R&D offering. We can take care of all your company’s accounting needs with our regular accounting service and assist with the R&D claim in addition to this.

What are R&D Tax Credits and how do they work?

To help businesses in the UK grow and develop, and to encourage continued innovation, the government has created an incentive scheme – R&D tax credits.

It allows up to 33.35% of a company’s R&D spend to be recovered either as a reduction in Corporation Tax or a cash repayment. It is tax-free and can be used for a wide range of purposes, such as hiring new employees or investing in new equipment.

In a nutshell, the incentive scheme means that a percentage of the money your business invests in ‘innovation’ can be claimed back.

Do I Qualify for R&D Tax Credits?

When it comes to industries, there are no strict rules on who can or can’t apply for R&D Tax Credits – any company in any industry may be eligible to claim.

The governments’ requirements state that a company must have “undertaken qualifying research and development activities” to be eligible.

The official definition from the government is:

“R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology. The activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D.”

UK Government

What projects can be included as R&D?

For your work to qualify for R&D relief, it must be part of a specific project to make an advance in science or technology (this does not include social sciences such as economics).

Projects also need to relate to your trade – either an existing one or one being developed because of your R&D work. You should be able to explain how your work has:

  • looked for an advance in science and technology.
  • overcome uncertainty.
  • could not be easily worked out by a professional in the field.
Research & Development

How Do I claim?

This is where Gorilla Accounting is here to guide you through the process. As the #1 Accountancy Firm on Trustpilot, our expert team is available to tackle the financial legwork from all corners, helping you to steer your business to success. We will:

  • Carry out an initial discussion with you to identify if a claim is possible.
  • Provide advice on what qualifies as an R&D project and/or on what you need to do to meet the qualifying criteria.
  • Guide you in preparing a Technical Justification document based on HMRC guidance.
  • Review qualifying expenses and guide what costs would be eligible to be included on the claim.
  • Provide support in the Application for Advanced Assurance if this is your preferred route, to help assure that your claim will be accepted.
  • Include the claim and support documents on the company corporation tax return.

Still unsure?

If you’re unsure of any of this information, your Gorilla accountant would be on hand to assist you with any queries that you may have.

If you would like more information on choosing the right option for you, please get in touch as soon as possible.

With the increased administrative responsibilities that limited companies have, this means that you may find yourself paying more money in accountancy fees. With this in mind, at Gorilla Accounting you would pay one set fee which includes no extra charges or hidden fees.