UK Innovation Tax Incentives
The UK offers a range of tax incentives to promote scientific and technological innovation. These incentives significantly benefit companies investing in Research and Development (R&D) and become even more valuable when factored into broader tax advice.
The R&D Incentives team at A&M comprises experienced tax and finance professionals, alongside technical specialists including seasoned engineers. Their extensive experience advising businesses on UK innovation tax incentives is complemented by collaboration with A&M colleagues in the UK and globally, covering areas such as capital allowances, transfer pricing, transactions and restructuring.
Practical tax expertise has never been more valuable, especially with increasing scrutiny from HMRC of R&D claims, the evolving nature of the regime, higher tax rates and the ever-growing complexity of the corporate tax landscape.
R&D Tax Services
The team offers guidance on UK R&D claims for businesses of all sizes, ranging from complex corporate groups to fast-growing Small and Medium-sized Enterprises (SMEs). Currently, two R&D regimes are available, for large companies and SMEs respectively:
- R&D Expenditure Credit (RDEC): a taxable credit equal to 20 percent of R&D costs (resulting in a 15 percent ‘net benefit’ at current rates)
- R&D tax relief: an 86 percent enhanced tax deduction for R&D costs (resulting in a 21.5 percent ‘net benefit’). Losses may be surrendered for a 10 percent cash credit (14.5 percent for R&D-intensive companies)
The team offers a range of services to help companies access these incentives, including:
- Fully outsourced claim preparation: We take care of all stages of your claim process.
- Process design and improvement: We assist in-house tax teams in optimising how their claims are prepared.
- Claim assurance and defence: Our experts review work done by other advisers and can advise on resolving HMRC enquiries.
1. Fully outsourced claim preparation
We oversee every aspect of the claim process, taking the pressure off in-house finance and technical staff. Our assistance covers:
- initial scoping and data gathering
- coordinating technical discussions
- compiling calculations
- submitting supporting claim documentation.
2. Process design and improvement
We assist you in optimizing your R&D claim processes by designing efficient systems, applying a multi-disciplinary consulting approach to developing streamlined claim methodologies.
2.1 Enhancing efficiency of R&D claim processes
We design systems and processes that underpin robust claim methodologies, ensuring optimized and accurate claim preparation with a reduced time commitment.
We specialize in automating data flows, consolidating cost and project information and developing assessment approaches for the most complex organizations. Working with our colleagues in A&M Digital, we provide multi-disciplinary consulting services, including data analytics and AI, to deliver cutting-edge claim processes.
2.2 Updating operations to ensure compliance
Legacy methodologies, which may entail time-consuming manual processes and incur high annual consultancy fees, will benefit from process improvement. We work with clients to identify process risks and inefficiencies, simplifying claim preparation and ensuring accuracy. New reporting requirements for R&D claims mean that all companies should consider whether their claim methodologies are adequate.
3. Claim assurance and defence
Our experts are able to review claims prepared by other advisers, providing confidence that claims are compliant and adequately supported, and identifying opportunities that others have missed.
We also assist clients with responding to HMRC enquiries. The recent increase in HMRC scrutiny of claims means many companies are facing an enquiry for the first time. We bring experience and pragmatism to ensure that enquiries are resolved quickly and favourably.
Patent Box advice
The Patent Box is available to companies that commercialize certain types of intellectual property, providing an effective tax rate on profits as low as 10 percent. The team assists clients throughout the compliance process, which includes:
- identifying qualifying IP
- ‘tracking & tracing’ patent-related expenditure
- preparing all required calculations and documentation
- developing processes suitable for clients to take in-house
We also provide guidance on the implications and opportunities arising from tax transformation and broader corporate changes. Our services include delivering Patent Box advice as part of transfer pricing reviews and group restructuring projects.
Capital incentives, including R&D Allowances
In collaboration with our specialist Capital Allowances team, we advise on the interaction of the reliefs available on intangible fixed asset expenditure, as well as the availability of accelerated deductions for capital assets purchased for R&D.
Through detailed analysis, we help with categorising capital-in-nature software additions, ensuring that capital allowances opportunities (including the superdeduction and full-expensing provisions) are identified alongside preparing R&D claims.
We also advise on claiming R&D Allowances (RDAs), which provide a 100 percent deduction for eligible capital additions, and can offer a significant cash-flow advantage for companies investing in R&D facilities.
