R&D Tax Credits are a government tax incentive designed to encourage and reward companies that invest in research and development in the United Kingdom (R&D). Companies can claim a percentage of their R&D costs as a tax credit or a reduction in corporation tax under the scheme.
To be eligible for R&D tax credits, the R&D activity must be related to a specific project that aims to achieve a scientific or technological advance. The company must also carry out the activity, and the company must be subject to corporation tax.
REQUIREMENTS FOR SUCCESSFULLY CLAIMING R&D TAX
Eligible R&D Activity:
The R&D activity must be related to a specific project that aims to achieve a scientific or technological advance by resolving scientific or technological uncertainties. The activity must also aim to create or improve a new product, process, or service.
The R&D project must seek to achieve a technical advancement that would be difficult for a professional in the field to work out.
We will be needing supporting documentation to demonstrate that the R&D activity meets the eligibility criteria. This includes technical reports, project plans, and financial data.
Eligible expenditure includes staff costs, consumables, software, subcontracted R&D, and certain types of overheads. Companies must ensure that eligible expenditure has been correctly identified and calculated.
To support their R&D tax credit claim, businesses must keep accurate financial records. This includes information on all expenditures associated with the R&D project.
Corporation Tax Liability:
The company must be liable for UK corporation tax and must have filed all required tax returns.
It is important to note that the rules and regulations governing R&D tax credits in the UK are complex; therefore, Guardians Accountants provides all accountancy services to ensure that they meet all requirements and make a successful claim.