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Blog: Three reasons to stop ignoring R&D tax credits

Research and development (R&D) tax credits have been around since the millennium, and the number of claims madis increasing every year. Most innovative businesses have some awareness of the scheme, but we know that many never get around to claiming. Below we share 3 reasons why you should be checking if your business qualifies.  

1. Significant tax savings  

You can get back up to 33p for every £1 spent on qualifying research and development. The latest statistics show that the average R&D tax credit claim value is £84,434. That’s funds we regularly see re-invested into new projects, equipment, and technical staff. These are the tangible benefits that make the scheme so worthwhile for businesses of all sizes.  

R&D tax credit statistics 2021

If your business is loss-making, you can even choose to receive your entitlement as a cash credit from HMRC. And if you’re new to the scheme, you can enhance your claim further by back-dating for R&D undertaken up to two years ago.  

Input your estimated R&D spend into our easy-to-use R&D tax credit calculator to see how much you could receive.  

2. Accessible funds without the debt  

Unlike many traditional forms of finance such as bank loans, R&D tax credits are not a debt to your business and do not require you to dilute equity. The amount your business receives is based solely on expenses already incurred. You also don’t have to undergo a credit check or have a good credit rating to claim – you just need to be a going concern. 

Moreover, while funding such as grants can be highly competitive, R&D tax credits are extremely accessible:

  • There is no cap on the number of companies who can claim or for how much or how little. 
  • There are schemes for both large and small companies undertaking primary or subcontracted R&D. 
  • The R&D tax credit scheme takes some of the risks out of risk-taking, as it even allows claims to be made on unsuccessful R&D projects. 
  • The government knows that R&D can take place across any industry and any business size so what qualifies for the scheme is intentionally broad. 
  • You don’t need to be in science or tech to benefit. In fact, the latest statistics show that claims are made across all sectors – even those you wouldn’t traditionally associate with R&D, like real estate and the art.

R&D tax credit statistics - By industry

This broad eligibility is particularly appealing to innovative start-ups and small businesses that may struggle to secure funding. Furthermore, HMRC is committed to processing claims in as little as 28 daysso if you’re in need of a quick cash injection then R&D tax credits may be the solution you’re looking for.  

3. It’s easier than ever to claim 

While the rules and guidance surrounding the scheme can be complex, and making a successful claim yourself can be a demanding process, the rise of specialist R&D tax credit advisors has made it simpler and easier than ever to claim.  

Specialists have specific experience, employing technical analysts from within your sector who understand how to identify, compile, and present a compelling case that ticks all the HMRC boxes. They are also likely to have a close working relationship with HMRC and know how to prepare claims in a way familiar to their teams. This all means that the claims process can be quick and simple, with most only requiring a small amount of your time.  

Ultimately, R&D tax relief is there to reward companies for investing in research and development. It’s no-strings-attached funding, and you have nothing to lose by exploring your eligibility to claim. So, if you think you’ve undertaken – or are planning to undertake – work that you think might qualify, get in touch and speak to one of our expert advisors today.