The ability to claim back research and development (R&D) tax relief or credit on development projects is a significant benefit. This funding is especially advantageous for small and medium sized businesses (SMEs) that can reclaim up to 33p for every £1 spent. Large companies can also benefit, though at a lesser rate. However, many businesses fail to file a claim for these funds, particularly small businesses that may believe the benefit does not apply to them. Figures show that only one-in-ten small businesses with 50 employees or less were claiming R&D tax relief. This is far from ideal, especially given that the scheme is relatively generous and is intended to support the growth of SMEs. Companies are losing out on funds that are rightfully theirs by not claiming.


One of the main reasons for failing to claim for R&D tax relief or credits is the misconceptions around who can claim and what qualifies as “research and development”. Many businesses might think that what they’re doing is not particularly innovative or special. However, you don’t have to be inventing the cure for cancer or coming up with the next Facebook to qualify. Even projects that may be considered simple or basic may qualify a business for R&D funds. To qualify, an advance in science and technology needs to be made, and there must be a need to overcome technological uncertainties. Many activities that are being carried out to create or improve upon products, processes, or services will qualify an SME for R&D funds. Even changes such as using a new material to develop a manufacturing component, changing a recipe to lower the levels of sugar in food manufacturing, or creating a process to integrate data could all be considered R&D activities. If information on how to successfully complete the project is not in the public domain and if you had to overcome technological uncertainties to achieve a result then your activities should qualify. The key is that technological uncertainties are tackled in the process and that insufficient or no information is already available on how to carry out the process successfully.

R&D Tax Relief & Credits

This brings us to another misconception about R&D tax relief: You need to be successful with your R&D to claim the benefit. This is absolutely untrue. The government acknowledges that R&D is difficult and sometimes the desired outcome will not be achieved. R&D projects that don’t conclude with the desired results can be very costly for a business. Even if the sought after technological or scientific advancements are not obtained, research and development activities will have clearly taken place and could still qualify for funding.


The third misconception about R&D tax relief is that if you don’t submit the claim by your tax year’s deadline then it is “too late” to claim. This, too, is false. You actually have up to 2 years after the end of the tax year to claim tax relief on R&D projects undertaken. For example, if your accounting year runs from 1st July to 30th June each year, you have up until the end of June 2017 to submit a claim for the year ending June 2015. That means that if you haven’t been claiming, you could start right now and claim up to two back years, earning your business a well-deserved cash injection. Better still, R&D Cashflow Funding from Fundsquire can provide you with early access to your funds to improve your working capital or to further increase your investment on R&D activities.


Contact us today to learn more about R&D Cashflow Funding.