At Accountancy Cloud, one of the most common things we hear from our clients is “we know R&D credits exist, but it’s too complicated!”. From the endless lists of requirements, to HMRC’s detailed jargon infested documents, it’s a maze that many eligible businesses give up on before they’ve started.
Well, not anymore! We hate the fact that 95% of eligible businesses miss out on the R&D tax credits they deserve, and we’re tackling it, one claim at a time.
Not only are we fluent in HMRC, but we’re pretty awesome translators too. So, let’s cover once and for all, what exactly qualifies for R&D under New Product Development?
First off, what are R&D tax credits?
Research and development tax credits are incentives created by the government to advance innovations across a variety of industries.
Translation – they’re a cash reward for your work. These can be claimed in 3 ways.
- Cash credits
- Corporation tax rebate
- As an expenditure
If your business spends time creating or developing your services/products or contributing to broadening the overall knowledge of your field, then it’s time to claim.
So…what qualifies under new product development, exactly?
What’s New Product Development (NPD)?
NPD is an overarching term that covers a range of activity – whether it’s developing an entirely new product or a significant update of an existing one.
To be eligible, you can’t simply provide a portfolio of new products. You must demonstrate that your business faced technical challenges in the process to create something new!
Do you qualify for NPD?
Well, HMRC defines eligibility as:
“Activities that seek to:
- Achieve an advance in overall knowledge or capability in the field of science or technology, and;
- Resolve scientific or technical uncertainty.”
But let’s break this down further….
Qualifying activities include:
- System integrations
- Material development
- Prototype building, testing and tooling
- Product design
- Software development
- R&D equipment Maintenance
- Integration of systems
But what activities don’t qualify?
Unfortunately, you can’t qualify for R&D funds on all stages of new product development. These include:
- Market research
- Patent searches, fees and writing
- Legal fees
- Company ISO accreditation
- Capitalised production equipment
Join us on LinkedIn Live!
We hope this guide helps you through the R&D maze…and if you liked this, then you’ll love our up-coming event. Swoop and Forward Partners are joining us over on Linkedin Live for our event, Finding Your Funding.
Come along, on Friday the 28th May (2021) at 11am, to discover everything you need to know about the R&D, grants and funding opportunities available to you.