Helping businesses secure and maximise R&D tax credits and grants

R&D Tax Credits

R&D Tax Credits enable businesses that incur costs in developing products, processes, software or services to receive a corporation tax deduction or cash payment from HMRC. Myriad Associates will ensure your R&D tax credits is fully maximised.

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R&D Tax Credits

Guide Overview


Below we've created 6 simple sections to help you understand how R&D tax credits work and whether your business could make a claim.

What are R&D Tax Credits?


The research & development (R&D) tax credit is designed to encourage innovation and increase spending on R&D activities for companies operating in the UK.

It's one of the UK government's top incentives for encouraging investment in research and development and allows up to 33.35% of a company's R&D spend to be recovered as a cash repayment.

Last year more than 39,000 UK companies took advantage of the scheme, claiming nearly £3.5bn in tax relief.

What are R&D Tax Credits?
Who is eligible for R&D Tax Credits?

Who is eligible for R&D Tax Credits?


Any company in any industry may be eligible for R&D Tax Credits.

The key is that the company must be undertaking development activities that seek to achieve an advancement in science or technology.

These include:

  • Creating new products, processes or services.
  • Changing or modifying an existing product or service.

What are the key benefits of R&D Tax Credits?

R&D tax credits can be a valuable form of financial support for all businesses. In addition, it is helping businesses across all sectors in the UK develop some of the world's leading products, processes and services.

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Cash Injection

R&D Tax Credits provide an essential source of non-repayable funding for many small, medium and large enterprises.

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Boost Innovation

R&D Tax Credits help encourage businesses to invest in R&D and innovation.

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Economic Growth

Every £1 spent on public R&D delivers approximately £7 of net economic benefit to the UK and unlocks £1.40 of private R&D investment.

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Global Leaders

R&D Tax Credits help put the UK at the forefront of R&D and innovation across the globe.

Myriad is professional, helpful, knowledgeable and friendly. I would definitely recommend Myriad to anyone who thinks they might have an R&D claim. It's great value for money. So it's a no-brainer for me really.

Caroline Reid

Senior Finance Officer, Storage Made Easy (Vehera Ltd)

Is my business eligible for R&D Tax Credits?


If your company is taking a risk by innovating, improving, or developing a process, product, or service, then it will likely qualify for research & development tax credit.

A good test to determine if the work undertaken qualifies as R&D, is whether your project team faced uncertain outcomes at the start of the project.

That means that your team did not know from the outset whether a particular outcome was achievable.

If you can show that your project goes beyond simply applying existing technologies, then you may be eligible to make a claim.

Which scheme is right for me?

There are different types of R&D tax relief depending on the size of your company and whether the project has been subcontracted to you or not.

These are SME R&D relief and Research and Development Expenditure Credit (RDEC).

Find out which scheme you're eligible for

SMEs are companies with less than 500 employees with a turnover of below €86 million. Companies above the SME threshold are classed as large companies.

Does your business qualify?

Speak to our experts today to see if your activities qualify.

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R&D Tax Credits Calculator


This R&D tax credits calculator will provide you with an estimate of the corporation tax savings that you may receive from HMRC following a claim for R&D tax relief.

Who are you?

What is this? SME scheme qualification is less than 500 employees and one of the following; annual turnover not exceeding €100m or balance sheet not exceeding €86m.

Is the company profit-making or loss-making?

What is your annual R&D costs on staff, software & consumable items?

What is this? Staff costs include gross pay, NI ERS and company pension payments. Agency labour cost is restricted to 65% of the invoice value. Software license costs relate to costs expensed to the P&L account and not treated as a fixed asset. Consumable costs relate to items that are consumed or transformed during the development process such as materials, components and electricity or gas etc.

What is your annual expenditure on agency workers & contractors

What is this? Enter the annual expenditure on sub-contractors who are involved with R&D activities.

We estimate you can save:

£510,625Reset


Contact our R&D tax specialists to make sure your R&D tax relief
claim is fully maximised.

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What’s the process to claim R&D tax credits?


R&D tax relief claims are monitored and processed by HMRC and you can make a claim going back 2 accounting periods.

Although it is not a legal obligation, we recommend that a research and development tax relief claim report is produced that justifies the technical advancement and uncertainties as well as details the eligible expenditure that is being claimed on a project by project basis.

In order to maximise your R&D claim, we recommend speaking with an R&D tax specialist to ensure you're not leaving money on the table.

In the past, Myriad Associates' R&D tax services have tripled the claim value for businesses who’ve previously compiled their claims in house.

Whats the process to claim R&D Tax Credits

How we can help


By profiting from our specialist R&D tax credit knowledge and experience, you can be sure of securing & maximising your R&D tax claim. Typically, Myriad Associates submit R&D tax relief claims that deliver up to 3 x more value than in-house prepared claims or those filed by generalist accountants.

About Myriad Associates

Our ethos

  • Excellence and an uncompromising commitment to quality.
  • A partnership that strives to add significant added value to our client.
  • Full transparency of our services and costs, from start to finish.

Our approach

  • Confident of delivering value to our clients, we offer our R&D tax services on a success-fee only basis.
  • We handle your R&D tax claim from start to finish, taking up just two to three hours of your time.
  • Our expert consultants can identify all of your qualifying projects and all your eligible expenses including costs often missed by accountants and in-house teams.
  • We make sure HMRC handles your claim promptly, due to our close working relationship with all HMRC R&D Tax Credit Units and our right-first-time approach.
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Our results

  • We have a 100% success rate spanning 18 years, which means every claim we’ve sent to HMRC has been approved.
  • Trusted and respected advisor to our many delighted clients with an industry high customer retention rate.
  • Myriad has achieved exceptional results by resubmitting R&D claims that were originally filed by the client. In some cases, we’ve increased previous claims by 300%.
  • 1st class industry reputation delivering maximised R&D tax credit claims to companies in manufacturing & engineering, pharmaceutical, software, supply chain, digital design, immersive technology, food and beverage and many more.

Frequently asked questions


A business can submit an R&D tax relief claim at any time up to the first anniversary of the filing due date of the company tax return for the accounting period in which the claim is made (paragraph 83E(1) of Schedule 19 to the Finance Act 1998). This means that a business can make a claim for R&D tax relief going back 2 accounting years. The claim can be made in a company tax return or in an amendment to it.

Many businesses don’t realise that they are undertaking eligible qualifying activities. It is not uncommon for their accountants to forget to tell them about R&D Tax Credits or even to tell them that they don’t qualify. If your technical lead (the R&D manager, lead engineer, or lead developer) is struggling to overcome the technical challenges of your project – if they are scratching their head wondering how to proceed, or losing sleep worrying about the technical uncertainties they face – your project will almost certainly qualify for R&D Tax Credits.

HMRC will follow guidance in their Statement of Practice SP 05/01 to deal with claims that are late. The success of these appeals depends on the facts of the case in hand, however it is very rare that HMRC will allow a late claim based on not having sufficient time or not being aware of the R&D tax relief scheme.

When you make a claim for R&D tax relief it will be reviewed and processed by one of the HMRC R&D specialist units. It is normal practice for an Inspector at the HMRC R&D unit to review every first claim that is made by a business. The Inspector will risk assess the claim and this will determine the level of reviews for subsequent claims. If the Inspector has any questions relating to the claim then they will raise an enquiry, which is usually done by writing to the company. We strongly advise that a claim for R&D tax relief is supported by a detailed report which outlines the technical advancement and uncertainties as well as providing a detailed breakdown of the eligible R&D costs.

One of the conditions for a company to make a claim under the SME scheme is that the expenditure is not incurred by carrying out R&D as a subcontractor. If a ‘large company’ subcontracts its R&D to an SME, then the SME can make a tax credit claim, but only under a Large Company Scheme. Where successful, this will entitle the company to a 25% deduction for qualifying R&D expenditure.

Where the SME is making a claim under the Large Company Scheme, losses arising from that expenditure cannot be surrendered for a payable tax credit.

Generally, if a company has received a grant for a project, this will not prevent them from claiming R&D tax relief. They will however, only be able to apply for this under the Large Company Scheme.

This means that potentially if your company has received a relatively small grant your company could lose money overall, as some grants can significantly reduce what your company can claim in tax relief. The difference between what the company can claim under the Large Company Scheme and the potential claim under the SME Scheme could be much higher than the grant itself. This is why you should always seek professional advice when making an R&D tax credit claim.

(See also: R&D Grants)

You will need to complete a Full Company Tax Return (CT600) and not a Short Company Tax Return.

If you are an SME, you will need to use CT600 (2015) Version 3 and complete the following boxes:-

  • Box 650 - you need to put a tick in this box.
  • Box 660 - you need to insert the total enhanced R&D tax relief. This is the original R&D expenditure plus the additional enhanced R&D tax relief.
  • Box 530 - this will need to be completed if you are claiming a tax credit payable amount.

Common examples of software development projects that may qualify for R&D tax relief include:

  • state-of-the-art software for new projects, or new functionality for existing R&D projects;
  • tools to extend the functionality of application software programs or of an operating system;
  • extensions to database software, programming languages, or operating systems;
  • software development tools, such as tools to port data across platforms, tools for image processing or character recognition;
  • novel data management techniques, such as new object representations and new data structures;
  • innovative methods of capturing, transmitting, manipulating, and protecting data;
  • software to run new computer hardware;
  • software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets; or,
  • means of integrating hardware and software platforms.

Common examples of product and process development projects that may qualify for R&D tax relief include:

  • innovative product development using computer-aided design tools;
  • development of second generation or improved products;
  • tooling and equipment fixture design and development;
  • developing unique computer numerical control programs;
  • designing innovative programmable logic controllers;
  • designing innovative manufacturing equipment;
  • prototyping and three-dimensional solid modelling;
  • designing and developing cost-effective and innovative operational processes;
  • integrating new materials to improve product performance and manufacturing processes;
  • evaluating and determining the most efficient flow of material;
  • designing and evaluating process alternatives;
  • designing, constructing, and testing product prototypes;
  • developing processes that would meet increasing regulatory requirements; or,
  • streamlining manufacturing processes through automation.

HMRC works to process applications for R&D Tax Credits within 28 days. However, the processing time required for HMRC to look at and consider an R&D Tax Credit claim depends largely on the nature of the claim itself in addition to the complexity of a company’s structure and its accounting. Even the time of year can make a difference, with peak accounting times such as March and December being particularly busy and therefore slower.

You can claim relief on costs that have been expensed through the Profit & Loss account and in certain circumstances you can also claim capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets).

The main areas of costs that can be claimed are:

  • staff costs (Incl. gross pay, employer's NI, reimbursed expenses and employer's pension contributions);
  • agency workers (externally provided workers),
  • subcontractors/freelancers
  • software license costs, and
  • consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process).
  • payments to the subjects of clinical trials.

It is not uncommon for an R&D team to consist of many individuals from different parts of the business.

Your R&D project team may include the R&D Manager, a Lead Developer, Engineers, Project Co-ordinators, CAD Engineers, Quality Control and Testing specialists, and Cost Accountants, as well as members of the senior management team.

R&D Tax Credits for profit-making SMEs

The R&D tax relief would enable a profitable SME to reduce the amount of corporation tax they pay on profits for the period, by the amount of the enhanced deduction.

The current R&D tax credits rate results in a 24.7% benefit on R&D expenditure for profit-making SMEs. If the deduction is greater than the SME’s profit for the period, then this will create a loss for corporation tax purposes.

R&D Tax Credits for loss-making SMEs

Where the additional enhanced R&D deduction is greater than the SME’s taxable profit for the relevant accounting period then this creates a loss for corporation tax purposes.

 

The SME can then decide between the following options:

  • carry back the loss to the previous accounting period (if there was a taxable profit);
  • carry the loss forward and offset against future profits:
  • surrender the loss (fully or partially) to HMRC in return for a payable R&D tax credit.
  • The company can surrender the lower of the enhanced R&D relief or the taxable losses for the period.

The losses are surrendered for a cash credit (tax credit payable) and the current rate is 14.5%. So as the enhanced R&D tax relief is 230% a cash credit can be worth as much as 33.35p for each £1 of eligible R&D expenditure.

The Research and Development Expenditure Credit was introduced on the 1st April 2013 and replaced the original Large Company scheme entirely on 1st April 2016.

The key difference between the RDEC and the Large Company scheme is that the RDEC allows a loss-making company to receive a payable tax credit.

The RDEC is a taxable receipt and it is paid net of tax to companies with no corporation tax liability. The current RDEC percentage is 12% and therefore at a corporation rate of 20% the net cash benefit to a large company is 9.7% of the qualifying R&D expenditure.

Your next steps

To find out how we can maximise your R&D tax credits, email or call us now on 01858 776 045 - in under 15 minutes we’ll advise you if your development activities will qualify for R&D tax credits.

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