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Research and Development Tax Credit

As a company ECAD the Engineering Exchange can offer their technical skills to industrialise your idea, but we also focus on maximising your funding.

R&D relief allows companies that carry out qualifying R&D related activities to claim an extra Corporation Tax deduction for certain qualifying expenditure.

The level of relief available depends upon which of the following schemes your business is eligible to claim under:

• SME scheme – Average of 25% of qualifying costs can be claimed by small and medium enterprises;
• The Research and Development Expenditure Credit (RDEC) scheme – Approx. 10% of qualifying costs can be claimed if your business has more than 500 full-time equivalent staff or EUR 100M turnover.

This tax benefit can be realised even if you are in a loss and can be claimed every year in order to offset the financial risk of technically challenging activities that grow the capability of a business. We advice businesses on the various ways you will be able to realise the benefit in future years to help you understand how to incorporate tax credits into your financial projections and business strategy.

Projects that count as R&D

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths.

The project must relate to your company’s trade – either an existing project, or a project that you intend to start-up based on the results of the R&D.

To get R&D relief you need to explain how a project:

• looked for an advance in science and technology
• had to overcome uncertainty
• tried to overcome this uncertainty
• could not be easily worked out by a professional in the field
• Your project may research or develop a new process, product, or service, or improve on an existing one.

https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief

https://apply-for-innovation-funding.service.gov.uk/competition/search

Example of R&D Tax Credit
Fabrication Company Example
A company which specialises in fabrication, construction and structural engineering with a full offering of services from project management to the structural design, build, and commissioning of large-scale equipment. The competent professional’s capabilities include specialised knowledge and experience in the areas of heat transfer, pressure vessels, pipe stress analysis and pipeline engineering.

wdt_ID RDTC Year 1 Accounts Year 2 Accounts

The R&D claim is submitted to HMRC as part of the company’s corporation tax return (CT600).

Research and development can be qualified in multiple ways, essentially the work we can qualify has to be uncertain and follow a logical process of appreciable development. It cannot be work the company undertakes every day, it must challenge employees to come up with novel solutions that haven’t been previously faced within the company.

The qualifying Research Development expenditure is made up of:

• Employee Staffing costs
• Consumables
• Externally provided workers (agency staff)
• Subcontractors
• Software Licences

There are a wide range of technical and non-technical activities that can be qualified as the industry is in the early stages and there is limited research accessible via public sources. This means a company has to undertake development and experimentation to gain new knowledge in order to achieve a project objectives.
The following activities can be potentially qualified, this is not an exhaustive list:

Agriculture

Crop Production Optimisation
Farming Trials & Yield Research
Soil & Crop Resilience Research
Farming Ancillary Product Development
Automation Of Processes

Manufacturing

Energy Optimisation
Reducing Waste
Control & Quality Improvements
Manufacturing Compliance

Food

Infused Edible Development
Scaling Batch Manufacturing
Nutritional Research & Experimentation
Supplement Development
Enhancing Bio-availability Of Specific Compounds In Products

Topicals

Cosmetic Formulation Development
Organic & Novel Ingredient Experimentation
Clinical Testing

Packaging

Alternative Paper Development
Sustainable/Recyclable Packaging Development

Software

Novel Application Development For Smarter Processes

Engineering

Sustainable Construction Solutions
Bio-fuel Development
Phyto-remediation
Laboratory Testing Procedure Development

Textiles

Sustainable Fabric Development
Novel Applications Of Alternative Fabrics
Scaling Fabrics Manufacturing
Enhancing Fabric Abrasion Resistance & Quality
Contact us now to learn more and Apply for R&D Tax Credits