At Old Mill, we are passionate about innovation and understand its critical role in driving growth and competitiveness. Whether you’re a start-up or an established business, we have the knowledge and expertise to help you access valuable innovation tax relief, ensuring that your business can evolve in the ever-changing landscape of technology and innovation.
What is R&D tax relief?
R&D tax relief is essentially a form of government subsidy designed to encourage companies to invest in innovation to develop new technologies, products, materials, or processes. For loss-making companies, this money is received in the form of a cash payment from HMRC. For profit-making companies, the money comes from a reduction in their Corporation Tax payment.
Companies are free to use the R&D tax savings or tax credits they receive as they choose. For some companies, particularly in the early stages of the business cycle, the R&D funding may provide an essential boost to their cash flows to continue their journey. Other companies may choose to reinvest the funds in further R&D efforts, hiring new staff, or marketing new products, growing their business and ultimately boosting both the UK economy and the shareholders’ value in the process.
To qualify for R&D tax relief, the company must undertake R&D activities that aim to push the boundaries of existing knowledge by making scientific or technological advances to tackle difficult issues that experts can’t easily figure out. These activities can underpin the journey of creating a new or improved product or process or increasing knowledge in a particular field. The R&D efforts also do not have to be successful to qualify.
What are the benefits?
Under the current rules (R&D merged scheme), loss and profit-making companies both receive the incentive through an R&D tax credit of 15%-16% of the qualifying R&D spend. The tax credit is either paid to the companies in cash or offset against their Corporation Tax bill. This is an additional relief on top of the normal tax deduction the companies receive for all their allowable expenditure.
A special regime is in place for R&D-intensive loss-making companies. Provided that they surrender the future benefit of their R&D-related tax loss, they can claim a repayable tax credit of up to 27% of the qualifying R&D spend.
The current regime applies to accounting periods starting on or after 1 April 2024, and as far as we can see, it is here to stay for some time.
Previously, under the more generous SME scheme, profit-making SMEs could receive additional tax relief of up to 25p for every £1 spent on qualifying R&D expenditure up to 31 March 2023 and up to 21.5p for every £1 spent from 1 April 2023 onwards. Loss-surrendering companies could receive a total tax credit of up to 33p for every £1 spent on qualifying R&D expenditure up to 31 March 2023 and 18.6p (or up to 27p for R&D-intensive companies) for every £1 spent from 1 April 2023 onwards.
Companies have two years from the end of the accounting period to submit a claim.
How can we help?
We all know tax is complicated, and navigating innovative tax reliefs can be a real headache. Therefore, most companies rely on specialist advice to assess their eligibility and prepare both maximised and compliant claims.
Our tax team at Old Mill includes highly skilled and experienced R&D specialists who know the R&D tax scheme inside and out. They have a wealth of experience preparing R&D claims for businesses at various stages, sizes, and across a variety of sectors. We take the time to understand your business and technology, working with you to build a robust and compliant claim while ensuring you receive the maximum benefit you are entitled to.
We take a holistic view of your tax affairs and ultimate goals, focusing on building long-term relationships with you. We are regulated by the ICAEW and our taxation services (including R&D) fall within the Professional Conduct in Relation to Tax (PCRT) regulations, so you have peace of mind that your claim is prepared in line with these high standards. We approach our work with maximum transparency.
In recent years, HMRC has raised an unprecedented level of R&D tax relief claim checks, which can be very lengthy, costly, and stressful for you and your team. Involving an experienced, appropriately qualified, and regulated R&D specialist will dramatically reduce the risk of enquiry. Your adviser can ensure your claim is fully compliant with all the latest legislation and bridge the gap between your technical experts and HMRC, ensuring the claim is supported by robust justification and written in a language the HMRC inspectors will easily understand. However, HMRC launches a certain number of enquiries at random, so there is no silver bullet approach.
At Old Mill, our clients can benefit from a fee protection scheme – meaning that our R&D team, supported by our specialist tax investigation team, can deal with HMRC enquiries into claims we have advised on and submitted on your behalf without you incurring any additional costs.
If the company holds any patents or has made any potentially patentable advances, we can also explore whether you could benefit from the Patent Box tax relief regime, now or in the future.
Join the many businesses that have already benefited from Old Mill’s R&D tax services. Let us help you turn your innovative ideas into valuable tax savings. Contact us today to schedule a consultation and discover how our R&D expertise can boost your business growth.
