R&D is a great way for your business to reduce its Corporation Tax liability, however, this can be a complex process and many businesses are unaware that they could be making a claim.
To get you started we have created a simple process for you to understand if you should be claiming and give you an indicative figure on what you could look to achieve from your claim. This R&D calculator may be good, but it is in no way a substitute for the professional advice of one of our R&D specialists.
Step one: Fill out the calculator to the best of your knowledge.
Step two: Get your estimated figure.
Step three: Book your free consultation with one of our specialists who can talk you through the process of a claim and identify if there is a claim to be made.
Details & Assumptions
The above calculation is based on the figures you provided and may be more or less depending on the expenses you have included and the outcome of further discussions. The claim is also capped at £20,000 plus 300% of your total PAYE and NIC Liability which has not been included in the calculation.
1 Your Company can claim for salaries, wages, class 1 NIC and pension fund contributions for staff directly and actively engaged in the R&D Project.
2 Your company can generally claim for 65% of the payments made to unconnected parties. The subcontracted work may be further subcontracted to any third party. Special rules apply where the parties are connected. Please include 100% of your R&D subcontractor costs in this box.
3 Your company can claim for the cost of items that are directly employed and consumed in qualifying R&D projects. These include materials and the proportion of water, fuel and power consumed in the R&D process.
4 Your company may claim for the cost of software that is directly employed in the R&D activity. Where software is only partly employed in direct R&D, an appropriate apportionment should be made.
5 Where a prototype is created to test the R&D being undertaken, the design, construction and testing costs will normally be qualifying expenses. However, if the protoype is also built with a view to selling the prototype (such as the construction of a bespoke machine), HMRC considers that to be production and outside the scope of R&D, even if R&D was undertaken to create the prototype. In that case you need to work out the split between R&D expenditure and production costs. For example construction costs and materials consumed would not qualify but design, modelling and testing costs would.