What are R&D Tax Credits?

R&D Tax Credits are a tax relief designed to help UK companies innovate and drive progress.

If your business is advancing technology and has technical uncertainties, you could qualify for financial relief, which can reduce your costs and increase cash flow.
Appreciating recent rule reforms is essential to understanding how R&D claims may support your business’ strategy.

We know how important innovation is for your business, and our dedicated team is here to make understanding and benefiting from R&D tax credits easy. Let’s explore R&D Tax together in a straightforward, informative way that suits your needs.

What R&D Means for Your Business

The R&D tax credit scheme allows you to reclaim a portion of the money you have invested in innovation.

Provided your company meets HMRC’s definition for R&D Tax Credits, you’ll need to submit an R&D tax credit claim, potentially receiving a cash payment and/or a reduction in Corporation Tax.

To qualify, your business must:

  • Be eligible for corporation tax as a limited company in the UK.
  • Have engaged in qualifying R&D activities for tax purposes.
  • Have invested funds in R&D projects.

What Counts as R&D? Your Guide to Claiming Tax Credits

To submit a claim you have to be making a technological advance, have technical uncertainties and have qualifying costs. When you claim for the first time, you can typically claim for your last two completed accounting periods.

However, there are new rules which means you have to notify HMRC prior to making a claim, along with submitting an Additional Information Form (AIF).

Get in touch with the Lumo team to make sure you do not lose out on a claim due to the new rules.

Examples of sectors that can claim for R&D include:

● Life Science R&D Tax Credits: The UK’s global leadership in life sciences offers great opportunities for businesses to reclaim money invested in innovation.

● Food and Drink R&D Tax Credits: It is estimated that claims are only made for 1% of the R&D performed in this sector; perhaps your business is among the 99%.

● Science & Technology R&D Tax Credits: Many people associate R&D with sciences and technology, making it a common area for claims. If you’re involved in this sector, get in touch. However, R&D is often wrongly assumed to only be relevant to this sector.

● Manufacturing & Engineering R&D Tax Credits: Ideal for creating new manufacturing processes or transforming existing ones.

What activities are eligible for R&D tax savings?

During the R&D tax claim process, we will help you analyse the costs incurred in your R&D projects to work out your total eligible qualifying costs.

This includes:

● Staff costs.
● Freelancer fees or subcontractor work. This may also include payments made to the subjects of clinical trials.
● Materials and consumables.
● Certain types of software.
● Cloud computing costs.
● Pure Mathematics.

Try our R&D tax calculator to see how much your R&D tax claim could be worth.

Latest R&D Merged Scheme Rates:

SME R&D tax incentive RDEC Merged scheme Enhanced R&D intensive support
Company type Before 1 April 2023 After 1 April 2023 Before 1 April 2023 From 1 April 2023 From 1 April 2024 From 1 April 2024
Loss-making SME Up to 33.35% Up to 18.6% 10.5% 15% 16.2%
Profit-making SME Up to 24.7% Up to 21.5% 10.5% Up to 16.2% Up to 16.2%
R&D intensive SME Up to 27% Up to 27%
Large company 10.5% Up to 16.2% Up to 16.2%

Reference: ForrestBrown

R&D Tax Relief Schemes – Key Changes

The government’s target to raise investment in R&D to 2.4% of UK GDP by 2027 drives these changes.

As of April 2024, the two separate RDEC and SME tax credit schemes will be merged, streamlining the relief and helping control its overall cost.

Technical Changes to the R&D Tax Relief Regime

In addition to the rate changes, a number of technical and administrative changes are on the way, but these apply for accounting periods starting on or after 1 April 2023 or April 2024.

Advanced assurance, changes in the definition of R&D, and extensions to costs that qualify for relief are some of the technical changes shaping the R&D tax relief landscape.

R&D Tax Relief Claim Process – Changes from August 2023

All claims are required to be made digitally, except for companies exempt from the requirement to deliver a Company Tax Return online, and include an Additional Information form to be submitted through a new online portal.

Important Updates to R&D Tax Credit Rates

As of April 2024, the SME and RDEC schemes will merge, making the process more streamlined and accessible. With these changes on the horizon, it’s crucial to stay informed about how the new rules can benefit your business.

Lumo: Your R&D Partner for Growth

At Lumo, we’re not just service providers; we’re your innovation partners. Engage with our expert team for personalised advice and support on R&D tax incentives.

We’re committed to helping innovative businesses like yours grow, aligning with our ethos of supporting your journey to a brighter future.

Don’t let valuable opportunities slip away. Contact Lumo today and let us help you unlock the power of R&D tax credits for your business.

How does it work?

Get in Touch

Get Started with Your R&D Claim Today

Discover how much your business could benefit from R&D tax relief. Request a callback from one of our experts or use our eligibility checker to see if you qualify.

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Who is benefitting
from R&D Tax Credits?

SME vs RDEC: Which R&D Tax Credit Scheme is Right for You?

If your business is actively engaged in R&D activities, you could be eligible for financial support from HMRC through R&D Tax Credits. The key question then becomes: is there an advance in technology and are there technical uncertainties?

Find Out More

“Big thanks to the Lumo team for the excellent work on our R&D tax claim. You make the process really easy and getting 3x the money we expected from HMRC is an awesome feeling.

Huw Evans - MD & Technical Engineer - Arnia

Huw Evans - MD & Technical Engineer

Arnia

R&D Tax For Life Sciences Industry

Life science is an area that has seen a huge amount of investment over the last few years and that doesn’t show any sign of slowing down. Improvements to healthcare have come on leaps and bounds with the advent of new technology. But all of this investment needs cash behind it to support the future. The government has identified this as one of the key areas the UK leads the world and this is why it is supported with R&D tax credits.

Find Out More

“Big thanks to the Lumo team for the excellent work on our R&D tax claim. You make the process really easy and getting 3x the money we expected from HMRC is an awesome feeling.

Huw Evans - MD & Technical Engineer - Arnia

Huw Evans - MD & Technical Engineer

Arnia

R&D Tax Credits for the Food & Drink Industry

For far too long, there has been a perception that you have to be working in a lab, or building a new internet to be able to claim R&D Tax Credits. And that's simply not the case at all. As highlighted by the tiny percentage of eligible food and drink businesses claiming mentioned above, this is a sector that is missing out in a big, big way.

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“As a scaling business, the R&D claims has been an important part as a valuable cash injection to help us to keep improving the business in various ways

Stu Mcdonald - Manilife

Stu Mcdonald

Manilife

Maximise R&D Tax Credits for Your Science & Technology Business

Science and tech are a constantly changing environment. Coming up with new ideas and solutions for your clients is part and parcel of the everyday business. You have probably heard about R&D tax credits. To some, it seems nigh on impossible to get but the truth is that there are many different areas of these industries that are eligible for R&D tax credits. All you need to know is what is part of a valid claim.

Find Out More

“The process was very straightforward with no disruption to our business, The simplicity of making a claim through Lumo has given us the confidence to invest more heavily in innovative projects.

Paul Lofthouse - Business Development Director - Waymark IT

Paul Lofthouse - Business Development Director

Waymark IT

Unlock R&D Tax Credits for the Manufacturing Industry

R&D is something that many manufacturing or engineering companies carry out on a regular basis. Making new products, developing existing ones or changing processes keeps companies in these industries up with the competition. Research and development is the way that helps to fund the future investments.

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“Stephen was extremely helpful. He led us through the R&D process and was extremely honest, nothing was hidden i.e. costs etc A very professional job well done. A very delighted customer

T Stoker - Siloteq Limited

T Stoker

Siloteq Limited

Partner with Us

Keep your clients in safe hands, let us handle the claims on behalf of your clients whilst we make you look amazing!

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