What Can You Claim R and D Tax Credits For?

R and D tax credits. It’s always great when the government wants to give you free money, especially if you are a small business that could really benefit from it.

Through a program called research and development tax credits (R&D tax credits), the government may give you a lot of money if your work involves medical, scientific, engineering or technological research.

This scheme is based on the idea that the government encourages inventions and developing products that benefit society, so the government will give you some tax back to cover the costs of research.

It can be a bit complicated to determine what can you claim R and D tax credits for, but specialist Research and Development accountants like Quest can help you through the maze and ensure you get as much money as possible for your business.

The most important thing to bear in mind is that the costs must be related to research.

What Can You Claim R and D Tax Credits For? Here’s what you can claim:

Staff: For those who work directly on the research project, you can claim some of the costs of salaries, national contributions, pension contributions, and other expenses.

It can include administrative, maintenance, or clerical work directly supporting the project. However, it cannot include work that would have been performed otherwise, such as managing payroll.

This can also include the time that supervisors and managers spend overseeing the work of the project.

Agency fees can be claimed back up to 65%

Subcontracted work: This is a different rule depending on whether your company is small or large. A small company is one that employs fewer than 500 people and has a turnover of less than £100m, or a balance sheet value of less than £86m.

As long as the freelancer is involved in the project, small companies that subcontract work can often claim up to 65% back.

Subcontracted expenditures can’t be claimed by large companies unless it’s undertaken by a charity or higher education institute, an organisation for scientific research, a health care body, an individual or a partnership.

Software, materials, and utilities: You can claim costs for software and materials that were used in research. You might also be eligible to claim a portion of your utility bills (electricity, water, gas etc.).

Volunteers for clinical trials: You can get some of the costs of paying them to participate

Prototypes: If you plan to sell the prototype, you may be eligible for some of the design, building, and testing costs.

What Can’t You Claim R and D Tax Credits For? Here’s what you can’t claim:

– The production and distribution of goods and services

– Capital expenditure, although you might be eligible for a separate research-and-development allowance on items like buildings, machinery, and plant.

– The cost of land

– The cost of trademarks and patents

– Rates or rent

– Employment-related benefits

For a FREE Research and Development tax credits review for your business, call Quest Chartered Management accountants Birmingham at 0121 235 0315. We can help you reduce your tax bill and grow your business.

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