R&D tax back eligibility

It’s time to start investing in your company and its future.

Any company that spends some of their finances in development will be eligible to claim R&D tax back. In terms of what you can develop, well – as long as you’re developing some kind of new product, a process, or developing a service, you should be eligible.

Here is our quick eligibility checklist to help you figure out whether you might be eligible for a R&D claim:

  • You have a limited company that is based in and operates in the UK.
  • That company is subject to corporation tax.
  • You have worked on research and development projects that are qualified for R&D tax credits.
  • You have spent company finances on those projects.

Still unsure whether or not your company qualifies? You would be surprised how many different sectors have R&D companies that are eligible for R&D tax credits. Everything from cosmetics to mechanical engineering has the potential to claim. And we’re not saying that a section outside of those wouldn’t be able to – they’re just our examples.

Aerospace companies with R&D projects can claim, so can construction companies, telecommunication companies, breweries, and even the food & beverage industry.

It’s less about what sector your company works in and more about how your company has elevated the research and development of that sector.

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SME R&D tax credit scheme

For small to medium businesses under this tax credit scheme for their research and development endeavours, there are a total of five different ways that you can receive your pay out.


Tax refund

Research and development tax credits that can be claimed from the last two accounting periods. HMRC will give your business their tax refund as standard if you claim after a period that you have already paid tax for. This is similar to tax refunds for any average person looking at their annual taxes.


Tax relief

Provided that you make your research and development tax claim during the same annual period that you send in your corporation’s tax return, you may receive a reduction on your corporation’s tax for that period, rather than a refund. It’s better to explore this option when your corporation is making profit, rather than making a loss.


Loss relief

Somewhat opposite to the above, this option is better when your corporation is making a loss from R&D. After sending in your R&D tax credit claim, you can then carry that loss to the year before if you had made some profit during that period. You can also carry the loss forward, which is usually a better option.


Cash payment

A secondary option for corporations with R&D financial losses, you can surrender your losses and get cash credit from HMRC.


Combined outcome

The final option is to combine the different outcomes to better suit your corporation and its financial state after R&D. If you want to explore this option, it’s best to have a fully trained accountant with experience in R&D tax credit claims. Such as those of us here at Wizz Accounting.

RDEC scheme

There is a more complicated seven-step process for claiming R&D tax credit under the RDEC scheme. Corporations under this scheme would benefit from the support of an accountant because the scheme is aimed at companies which frequently invest in research and development, and would, therefore, need more involved help from one of our Wizz Accounting experts.

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