A finance 101 through Covid-19: Extend your runway with R&D Tax Credits

24 Aug 2020

Piggy bank

Businesses and startups are facing a range of new financial challenges in the wake of Covid-19. Our Building Future Resilience webinar series was packed full of information and advice to help, so if you missed the series or are looking for a reminder on the topics covered, we have collated a snapshot of key learnings here.

What are R&D tax credits? Research and development (R&D) tax credits are a government incentive designed to reward UK startups and companies for investing in innovation. They can provide an important cash boost for businesses and be an effective way of supporting the scaling up of your startup, through boosting your R&D and expanding your team. Companies that invest in their innovation by producing new products or further developing existing products are eligible to make a R&D tax credit claim. So, is it worth it? RDVault, provider of the world’s only fully integrated R&D tax credits claim software, have shared a couple of key points:

  • The government’s definition of R&D is intentionally broad – which means you could be carrying out qualifying activity and be eligible to make a claim. The government’s guidance is here.
  • Your business must be based in the UK to be eligible for R&D tax credits – but that doesn’t mean your R&D has to be. Companies with development costs overseas can still make a claim
  • R&D Tax Credits can provide, up to £55,000 per claim per year
  • HMRC have been consistently processing R&D claims to their target of 28 days
  • You can still make an R&D claim even if you are in receipt of grant funding to accelerate your innovation
  • It is possible to receive a claim sooner than you would usually expect. For example, many providing lenders offer a R&D drawdown loan to help you while you through the processing time, as long as you spend the loan on R&D and can quantify how much you expect to receive back from your claim
  • Companies in receipt of a Bounce Back or Coronavirus Business Interruption Loan Scheme loans (CBILS) can still make a claim – as long as they spend the money received on R&D
  • A claim can include the costs incurred from staff salaries, subcontractors, materials, software, and reimbursed travel
  • Elements of a large capital expenditure (eg expensive machinery) could qualify for R&D tax credits. 

 To learn more about R&D tax credits, visit the gov.uk website here.

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