R&D Tax Credits

R&D Tax Credit has been introduced as an encouragement tool aimed at (SME) Limited companies to stimulate scientific innovation and advancement giving rise to economic boost with an uplift in living standard of society at large, accountants in Windsor learns:

So how does it all works. Are there any inherent difficulties in the whole process from start to finish for small enterprises? Accountants in Slough explores all the relevant areas making it easy to understand with valuable insight for the first-time applicants.


For this purpose, an SME is the one which fits the below criteria as is recognised by UK authorities:

  • A limited company who has less than 10 employees & turnover up to £2 million (Micro Business)
  • A limited company who has less than 50 employees & turnover up to £10 million (Small Business)
  • A limited company who has less than 250 employees & turnover up to £50 million (Medium Business)

R&D Activities

To be eligible, besides company’s size the organisation must also engage in activities with a view to achieve advancement in science & technology and is spending financial resources on those projects.

Example of R&D may include significant enhancement in existing technology or such progress/achievement which has not been claimed yet and demonstration be given if needed e.g. improving the efficiency of a solar cell, developing a unique software or a ultra-efficient process resulting in enhanced productivity.

In stricter term a qualifying R&D activity must also be treated in line with UK accounting GAAP and fall in line with the definition as described by the department for business, innovation & skills (BIS).

Qualifying Expenditure

Windsor accountants note the general guidance issued by HMRC on the type of expenditure which may qualify the relief for R&D projects. Such as:

  • Staff hiring and cost of employment in proportion to the resources or time spent on R&D.
  • Workers hired from external sources.
  • Materials used in direct R&D activities including consumable and/or one which is transformed during the process.
  • Clinical trial payments made to volunteers.
  • Computer software.
  • Light, Heat, Water, Fuel Costs.

Where any part of R&D work is subcontracted by a large organisation unless it is to an individual or a partnership (of individuals) or a qualifying body (charity, research institution, health body or a higher educational organisation), such costs will not qualify for R&D relief, so will be the telecoms and other data costs for SME.

Rate of Relief

At present SME attracts an enhanced R&D tax credit relief at 130% of the qualifying expenditure. This is after a company has already claimed their normal corporation tax relief on qualifying expenditure at the prevalent corporation tax rate which stands at 195 now a day.

Loss Relief

Accountants in Slough reckons that such a generous relief may well push some companies into an accounting loss situation with two possible ways to deal with it. A company may either carry forward the generated loss to offset against its future profits or settle for a payable tax credit at 14.5%.

The following example will help understand above loss treatment in real world scenario.

Let say an eligible organisation undertook some R&D qualifying activity making a profit before tax and R&D tax relief of £50,000 in the year to 31st March 2018 with qualifying R&D outlay of £80,000.

The company as per UK GAAP has already deducted £80k from the above £50k profit. Now by claiming the R&D relief the company’s overall position will be:

Profit before R&D claim                 £50,000

R&D relief @130%                           £104,000

Loss after claim                                 (£54,000)

Option A: Carry forward loss to be relieved at 19% C.T.                    £10,260

Option B: Direct Cash Credit @14.5%                                                    £7,830

Further to above R&D tax credit relief to an SME, a Capital Allowance of 100% on qualifying R&D Capital expenditure items may also be claimed.


Large companies (see definition) are not eligible for enhanced R&D tax credit relief, they instead can make claim under research & development expenditure credit (RDEC) @ 11% of R&D expenditure which is offset against their corporation tax charge.

An organisation in the receipt of a government grant can also apply for R&D tax credit. The amount of relief available may vary according to the volume of government funding already been received.


In preparing their first claim, Windsor accountants advise SME that they take extra care for a smooth processing by HMRC and an eventual successful relief grant.

A joint effort by R&D management and finance section can save valuable time. That’s where Accounttax can make you stand out from the bunch by ensuring a swift and maximum availability of the relief from start to finish.


Normally R&D tax credit claims can be filed within two years of the accounting period in which you have incurred the qualifying R&D expenditure. E.g. for a qualifying project started between 1/04/2016 to 31/03/2017 the final date of claim submission will be 31/03/2019.

How Can Accounttax Help You?

Helping business and professionals, accountants in slough as small business accountants and tax advisors have a strong idea of the needs and services you require. With our experience and the insight, which accountants in Windsor have gained over the years ensures professionalism with your best interests in mind.

Accountants Windsor can also stay on top of any legislation changes that may happen throughout the year. Ultimately, this will help accountants slough to understand your specific area weather it’s IT Contractors or CIS Contractors, Property landlords or Property developers, Doctors or solicitors, Small business or a limited company, which will then let accountants in Marlow to give you the best possible service that is tailored to you and your business’ needs.

We offer a range of accountancy services local to Windsor, Ascot and maidenhead can help you keep your business successful. Some of these services include:

  • Managing your accounts
  • Offering advice on tax planning and reducing your tax bill
  • Providing payroll and bookkeeping services
  • Helping you with VAT and Digital tax (MTD).
  • Completing and submitting your tax returns on your behalf

Accountants in maidenhead will support you and your business, by doing so you can rest and stop worrying about the business. You can trust our professionals to take care of your business for you. Now you can focus on being exceptional entrepreneur.

Contact Us Today

We pride ourselves on providing excellent services in Thames valley including slough, Marlow and Bracknell areas to businesses and professional clients who are keen to improve their business model. Working with us can ensure that you are well prepared for the future of your business with full control and confidence.

For more information on how we can support you and your practice, call us today on 01753 299 993.

Any reader interested in discussing this topic further can telephone Accounttax on 01753 299 993 in our Windsor office or on 01753 299 993 in our Slough office. You can also email mail@accounttax.co.uk.

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The above information is provided for general guidance only without the taking any liability, written or implied, on the part of this firm, its officers and staff. It may not cover your specific business or personal situations, so you should avoid relying on it. It is important that you seek appropriate professional advice where you can provide the full facts of the case and all related documents. This firm or its officers cannot be held responsible for the consequences of any action or the consequences of determining not to act.


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