This is a question we get asked a lot by most potential clients. Quite often they have already looked through their accounts and identified a pot of costs that they have incurred in their R&D projects’ journey.
Most of the time we end up disappointing them by stripping out a lot of costs that simply aren’t eligible, but on other occasions we end up identifying a whole host of costs such as, directors’ wages for oversight and management of the R&D project; in software development projects the testers wages; project management and software costs, light, heat and water that are often overlooked.
The rest of the time we are confronted with potential customers who just want to let us get on with it.
Whether you have had a stab or not, we will make sure you are claiming the right costs and the maximum amount that you legitimately can!
Now to answer the question that we posed above, the simple answer is how long is a piece of string, it really depends on how much you have spent on eligible costs and the size of your business.
What I can tell you is that in the three and a half years of Cooden Tax Consulting’s existence, we have claimed over £3.5m for our clients and the average claim has been around £40,000 of tax relief.
If you are a small to medium sized business performing Research and Development for your own benefit and you are profit making, the Research and Development Tax Relief will generate tax savings of up to 26% of the eligible costs; if you are loss making you could claim up to 33.35% of the eligible costs as a Research and Development Tax Credit.
If you are a large company or an SME business being sub-contracted to by a large or international business to perform the Research and Development, then R&D Tax Relief scheme will allow you to claim Research and Development Expenditure Credit (RDEC) which in effect increases gives you tax relief of 8.8% of your eligible costs.
There are special definitions for a small- or medium-sized business, for R&D Tax Relief the definition is the EU’s definition of a company (or in the case of group companies or companies under the same control, the aggregate of those businesses) that:
- Employs less than 500 people; and either
- Revenue less than €100m; or
- Balance Sheet value less then €86m
There are quite a few pitfalls in valuing your R&D Tax Relief claim, so working with an expert will help you to avoid those and to maximise your claim.
Need advice on your Research & Development Tax Relief?
Cooden Tax Consulting are a niche tax consultancy that specialise in helping SME business owners determine whether they can benefit from Technology Tax Reliefs, specifically R&D Tax Relief, R&D Tax Credits, RDEC, Video Games Tax Relief & Patent Box.