In this short video, we cover how to account for the benefit of UK SME R&D tax credits in your company accounts. Typically your accountant would deal with this on your behalf but it useful to understand the mechanics so that you can see how it fits into the overall build up of your financial
R&D Tax Credits
Rewarding entrepreneurs who seek to push the boundaries
Would £50,000 cash deposited into your bank account make you smile?
Yes, that is the average claim size for companies claiming the R&D tax relief – well it is actually £53,876 if you wish to be specific (this is from HMRC’s published figures).
It is not often that HMRC will put cash into your bank account but that is exactly what happens for our clients. Many receive these sums (often well in excess and into six figures) each and every year as they continue to invest in developing new or improved products or services. And the funds are deposited within 4-6 weeks of submission of the claim.
In summary, the UK R&D tax credits incentive is one of the most generous tax reliefs currently available in the UK. It is a vital source of funding for many companies from startups to fast growth companies and international groups.
Big rewards fuelled by expertise
For tax reliefs that are this generous, there are (as you might expect) a number of hurdles that you need to overcome.
Firstly, you need to identify whether you have carried out any projects that fall within the relevant guidelines. If you do have qualifying projects, you then need to explain why and how your projects meet the guidelines plus identify your eligible spend. Finally, you need to include your qualifying spend within your company tax return and file this along with your detailed report with HMRC’s specialist R&D Unit for review and processing – or for them to ask any questions…
It’s a good job that we’ve been through this process 100’s of times. As qualified accountants, we work directly with companies to help them navigate the rules and prepare and file the detailed report and claim calculations. We also provide support to other accountancy firms. You don’t need to ‘leave’ your current accountants to work with us – we just add to the great work that they’re no doubt already doing for you.
It's not just us saying that we're good at what we do
Want to learn more about R&D tax credits?
Our R&D Tax Credits Technical Tool-Kit
Here are our latest updates
Don’t forget to take into account R&D tax credits when structuring your salary package as a director/shareholder (hint: dividends are not a qualifying cost for R&D tax credit purposes)