SME Scheme: R&D Tax Reliefs

22 October 2021 Tom Whitworth View all News

SMEs (Small and Medium-sized Enterprises) should take advantage of all tax planning opportunities available to them. Such opportunities aid with cashflow and facilitate further growth and investment.

There is arguably no greater tax planning opportunity for SMEs in the UK right now than government-backed tax reliefs on innovation, also known as R&D Tax Reliefs.

What R&D Tax relief is available for an SME?

The dedicated R&D Tax Relief for SMEs scheme was set up by the UK Government, and allows companies to claim tax relief often worth around 25% of qualifying R&D expenditure.

Furthermore, SMEs can claim tax credits if they are loss-making, which are worth up to 14.5% of surrenderable losses.

How do you become eligible?

An SME’s eligibility for R&D Tax Relief depends on the nature of the activities that took place. Any innovative projects or activities must comply with the government’s definition of R&D, which is as follows:

  • It must attempt to achieve an advance or improvement in science and technology.
  • It must attempt to overcome a technological or scientific uncertainty.

If you are unsure if your activity meets this definition of R&D, you can check yourself with our free R&D Eligibility Checklist.

What is the process for SME R&D Tax Relief?

The process of claiming R&D Tax Relief can vary in complexity depending on the work carried out. As a basic outline, a claim process will include gathering all technical project information involved with the project, compiling all qualifying costs, and preparing supporting documentation to demonstrate its eligibility as R&D.

Once prepared, a claim is submitted to HMRC, who will process it – this can take up to six weeks, but most will be processed within a month.

How can Radius help

The Radius team will help by taking a lead in the above process, working with your team to prepare all necessary documentation, cost records and supporting materials.

From there, our team will also present any available opportunities to maximise the value of your claim. Finally, before submission, our team will ensure it is fully compliant. This is very important and is why one of our team is a former HMRC tax inspector.

For more information, we welcome you to a free 30-minute consultation to discuss your potential claim.

What should I read next?

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