Tax efficient R&D - Services - Gateley

Tax efficient R&D

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Is your business carrying out research and development (R&D) or protecting intellectual property via patents?

If so, there’s a good chance you could ramp up profitability by claiming R&D tax incentives, Patent Box relief or both.

What is R&D tax relief?

If your company is carrying out R&D, many of your costs – including utilities, staff costs, consumables and even external contractor costs – could be eligible for this very generous tax relief. There are two schemes available, one for small and medium enterprises (SMEs) and another for large firms. 

  • For profitable SMEs, the benefit could be as high as 25% of the total expenditure. 
  • For loss-making SMEs, the result of a successful claim could be a cash payment of 33% of total expenditure.
  • The large company scheme, RDEC (Research and Development Expenditure Credit), offers a less generous, but still worthwhile, 11% cash benefit, based on an indicative tax rate of 19%. 

What counts as R&D?

The definition of R&D for tax purposes is a wide one, and companies often carry out qualifying activities without even realising. To qualify, a project must be designed to achieve advances in overall knowledge or capabilities by resolving scientific or technological uncertainties. 

There’s a chance that the expenditure you have incurred qualifies for significant tax relief if you’re:

  • Developing a new product, system or process that increases your knowledge or ability to do something, which was not publicly available or able to be worked out quickly and easily, or
  • Improving an existing product, system or process to make it better, cheaper or more efficient, or
  • Duplicating an existing product, system or process in a fundamentally different way to make it better, cheaper or more efficient. 

What is the patent box?

The Patent Box is an additional government tax incentive to reward innovative UK companies who create and protect intellectual property using patents. Companies who own or exclusively licence UK patents may pay a low rate of corporation tax on profits derived from those patents. The Patent Box may be claimed by companies at the same time as R&D tax credits. This ensures that innovative companies are rewarded with cash tax savings, even when their R&D activities on a particular project have come to an end.
 

What do we do?

We help companies access and maximise their entitlement to tax incentives. We guide you through the entire process of making an R&D tax incentives claim from start to finish, whatever the size of your company or the scale of your R&D. 

Step 1: A complimentary and no obligation consultation to discuss what your business does and its R&D.

Step 2: Once appointed, we maximise the analysis of costs that qualify for relief and provide a robust and transparent assessment that meets HMRC guidance. 

We help businesses to calculate their Patent Box benefit including:

  • Assessing eligibility for the Patent Box scheme.
  • Preparing documentation to support companies’ Patent Box elections.
  • Agreeing these elections with HMRC. 

We work closely with patent attorneys to understand whether a product is adequately protected. Our Gateley legal teams are experts in drawing up exclusive licences, so our approach to Patent Box and intellectual property matters is uniquely co-ordinated.

Who do we help?

We help companies from SMEs to large corporations take full advantage of the relevant tax incentives. We have advised businesses operating in sectors ranging from construction, engineering, IT, food and drink, health and life sciences, and even traditional manufacturers, on the opportunities available.

How much does this cost?

We usually work on a contingent fee basis. This means there is a direct link with the result, no downside in involving us, and you have peace of mind that our goals are fully aligned with yours. However, we’re always willing to discuss alternative fee structures.  Whatever the fee structure, you will always keep the lion’s share of the benefit.

In the unlikely event that HMRC queries our claims, we don’t charge any additional fees.

R&D tax relief explained

R&D Tax Credits allow companies to reduce their tax bill or claim payable cash tax credits as a proportion of their Research and Development expenditure. For every £1 of R&D spent, you could receive up to 33p back. 

Watch our short video for an explanation of R&D tax credits and why they matter.

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