Research & Development Tax Credits

The UK’s prosperity depends on its ability to innovate, create and expand science in technical expertise. Global activity is shifting towards knowledge and innovation and the UK Government’s business innovation strategy is to expand the level of Research and Design thus improving long term economic growth. Cost Care has operated successfully for almost twenty years managing claims for UK businesses. Over the last few years, we have engaged professionals incorporating tax specialists, engineers and project teams, managing complex R & D claims.

The UK Government backed initiative funded by the EU is designed to encourage SME’s alongside medium and large companies to invest in R & D therefore developing innovation. Cash backed refunds and reductions in future tax liabilities are offered to successful claimants. Our project management teams manage the process and assist in identifying projects your company has undertaken both in the initial year and in the two previous accounting years. Our in house engineers and project team will evaluate with you the qualifying technological advancements your company has made and under claimed.

In addition the Finance bill 2013 provides details of how the new ‘above the line’ (ATL) Tax Credit scheme will operate. The R&D Tax Credit scheme allows the benefit of the R&D relief to be accounted for as a reduction of R&D expenditure within the P&L (Profit and Loss) account. The associated tax credit is offset against payable corporation taxes. The principle intention of the introduction of ATL Research & Design tax credit scheme is to increase the visibility and certainty of UK R&D relief. The scheme offers financial support to loss making companies through having the R&D tax credit repayable where there is no corporation tax liability.

Key Dates

Research and Development (R&D) Tax Credits are a UK tax incentive designed to encourage companies to invest in R&D. Companies can reduce their tax bill or claim payable cash credits as a proportion of their R&D expenditure.

SME scheme introduced. Minimum spend in an accounting period set at £25,000 per annum. For accounting periods straddling 1 April 2000, it only applied to expenditure on or after that date.

Large company scheme introduced. Minimum spend in an accounting period set at £25,000 per annum.

For accounting periods beginning on or after this date the minimum spend in an accounting period for large companies set at £10,000

For accounting periods beginning on or after this date minimum spend for SMEs set at £10,000.

HMRC sets up specialist R&D units to deal with all claims from companies dealt with outside the LBS.

Enhanced deduction in Large Scheme increased from 125% to 130% of qualifying expenditure.

Enhanced deduction in SME Scheme increased from 150% to 175% of qualifying expenditure.

Definition of SME extended in relation to expenditure incurred on or after this date.

Enhanced deduction in SME Scheme increased from 175% to 200% of qualifying expenditure.

Enhanced deduction in SME Scheme increased from 200% to 225% of qualifying expenditure.

Removal of restriction of tax credit to PAYE and NIC liabilities in relation to accounting periods ending on or after this date.

Payable credit for loss making firms increased to 14.5%.

Announcement of enhanced deduction in SME scheme to 230% of qualifying expenditure from 1/4/15.