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  • Innovation and R&D incentives

Innovation and R&D incentives

The government encourages and incentivises innovation and R&D through a number of channels. The incentives take the form Research and Development tax credits and allowances such as patent box and other sector specific tax reliefs. Companies can also access a range of grants for innovation and growth projects.

Our team of engineers, scientists, software developers and financial consultants will provide you with the knowledge and expertise to access all of the available incentives as effectively as possible. We will review all your recent activities as well as advise on current and future projects.

Our team has a hard earned understanding of what it takes to quickly and effectively submit successful claims with HMRC. We have an excellent and longstanding working relationship with HMRC. Our specialists have a deep knowledge of the legislation and guidance with practical experience of making claims in a wide range of sectors and negotiating these claims with HMRC.  

We are also members of the HMRC R&D Consultative Committee.  We value our membership of this committee and the opportunity to contribute to the wider economy. 

Below is a list of the incentives and schemes we can assist with;

Research and Development tax credits

Research and Development Allowances (RDAs)

Innovation and Growth grants

Patent Box

Creative Sector tax credits

Intellectual Property Rights

Research and Development tax credits

Our team of 75 technical experts, engineers and accountants have the training and knowledge that means they understand your projects as well as how to prepare a robust and thorough R&D claim. We will assist with the qualification of your recent and current innovation and R&D projects and activities. We will challenge you and ourselves to maximise all and any R&D claims.

Our team and our approach date to the creation of R&D tax credits in the UK in 2000. Our R&D claims have always been led by our engineers and scientists. This approach is recognised and value by HMRC who prefer claims led by the technological and scientific aspects of a project. Every single one of our claims has been successful on technological level. That is a track record we would like to continue by working with you.

Types of R&D tax credit

There are two R&D tax credit schemes in the UK.

  1. SME scheme; delivers approximately 33% of qualifying expenditure as refundable tax credits
  2. Large company scheme (RDEC); delivers 10% of qualifying expenditure as refundable tax credits

Qualifying for these schemes can be complicated, especially if your company structures are more complex. Our awareness and understanding of the underlying tax legislation and EU guidance is invaluable.

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International R&D tax credits

Over 60 countries worldwide operate a version of R&D tax credits within their tax rules. Some countries provide relief within corporate tax rules while others operate within employment tax rules. However, the technological and scientific definitions of R&D for all countries have been driven by the Organisation for Economic Co-operation and Development (OECD). This means that all the countries tend to use broadly similar criteria for qualifying R&D projects. 

The BDO international network means we can advise on and assess R&D activity in every jurisdiction relevant to you with a view to claiming R&D tax reliefs. In particular, our specialists have experience in the USA, Canada, France, Ireland, Belgium, The Netherlands, Australia and Israel.  This specialism is expanding with the recent introduction of R&D Reliefs to New Zealand and the proposed introduction to Germany.

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Research and Development Allowances (RDAs)

RDAs are 100% first year allowances whereby a full tax deduction against annual profits. These can be triggered for the cost of capital items (including computer hardware, equipment, buildings and cars), that are employed by staff intending to carry out R&D. Claims for RDAs are closely connected to claims for R&D tax credits.

The major opportunity for clients here is where buildings are used for R&D as achieving this tax deduction can be quite beneficial.  

Our R&D team is well placed to review these capital costs for you as part of their work on R&D tax credits and ensure that your RDA claims are optimised. Where necessary, we work with our specialist Capital Allowances team. 

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Innovation and Growth Grants (“Grants”)

Government grants are available to help businesses fund R&D projects. Applying for a grant can be time-consuming and complex but that should not deter you. Our team of experts will help you throughout the process of identifying the right grants, completing an application and submitting it.

How are Grants awarded?

Most grants are awarded based on the location and nature of your project. Successful applicants are those who best demonstrate their innovative ideas, within the framework set by the Grant provider.

Main Grant providers

This is a list of the main grant providers in the UK. These are predominantly regional agencies. There are also other industry-specific grant funding sources. Which grant organisations are relevant will depend on your location, your industry, the nature of your project and the ability to disrupt other sectors through the application of your technology into that sector.

Location Grant providers Innovation focused Growth/Job creation focused
Scotland Scottish Enterprise
Innovate UK  
Northern Ireland Invest NI
Innovate UK  
Wales Welsh Government
Innovate UK  
England LEP Funding Growth Deal
Innovate UK  
ESIF  
Europe
(projects with an international collaboration or an impact at the international scale)
Horizon 2020  
Eurostars  
ERA Net  

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Patent Box

The Patent Box scheme is available to companies earning profits from goods and/ or services that have been patented in the UK or with the European Patent Office. It takes the form of a lower effective tax rate at 10% of the relevant profits. There are crossover linkages with R&D tax credits and we can advise on all aspects.

The rules may seem complicated at first glance, however the calculation need not be, particularly with some forward thinking and upfront planning.

We can help you streamline your Patent Box claim process including:

  • incorporating the information requirements into your normal financial reporting
  • transition to the modified nexus approach
  • advise you on how your group structure and transactions with third parties can impact the quantum of patent box benefit available

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Creative Sector tax credits

The creative industry plays an increasingly significant role in the UK economy. As a result the government has introduced eight targeted tax credits designed to encourage development and production activities in the UK. These can result in a cash refund of up to 20% of eligible expenditure.

The tax credits are:

  • Film Tax Relief (FTR),
  • Animation Tax Relief (ATR),
  • High-end Television Tax Relief (HTR),
  • Children’s Television Tax Relief (CTR),
  • Video Games Tax Relief (VGTR),
  • Theatre Tax Relief (TTR),
  • Orchestra Tax Relief (OTR), and
  • Museums and Galleries Exhibition Tax Relief (MGETR).

Our experienced team can help you at every step of the claim process, including determining whether your production, game or exhibition qualifies for the relevant tax credits. We can also help with obtaining BFI cultural accreditation where necessary, identifying qualifying expenditure and the interaction of the Creative Sector tax credits and other forms of state sector financing.

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Intellectual Property Rights

The protection of Intellectual Property Rights (IPR) is a key aspect of innovation and technology.  As well as traditional protection methods such as patents, trademarks, copyrights and design rights, you should consider using corporate structures to protect your IP. 

These include:

  • the use of limited liability companies to protect IPR
  • the separation of IPR from trading companies
  • setting up new group companies to protect IPR
  • setting up companies outside group structures to protect IPR
  • splitting an existing group to separate trading group companies from IPR protection companies

We can advise and assist on all aspects of IPR.

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