In today’s competitive business environment, innovation isn’t just a buzzword — it’s a survival strategy. Whether you’re developing new products, enhancing processes, or investing in cutting-edge technology, research and development (R&D) is at the heart of staying ahead.
What many businesses don’t realise is that the UK government offers a powerful financial incentive for this type of innovation: R & D Tax Credits. These credits can significantly reduce your corporation tax bill or even result in a cash repayment, freeing up capital to reinvest in your business.
At Coxhinkins, our accounting services are designed to help you unlock the full value of these incentives while ensuring every claim is compliant, efficient, and optimised for your unique situation.
What Are R & D Tax Credits?
R & D Tax Credits are a government initiative designed to encourage businesses to invest in innovation. They apply to companies undertaking qualifying research and development projects that seek to achieve an advance in science or technology.
The scheme is broad in scope. You don’t have to be working in a laboratory or a tech giant to benefit — many sectors, from manufacturing and engineering to software development and food production, can qualify.
In simple terms, if your project involves:
Developing new products or services
Improving existing ones
Solving scientific or technological uncertainties
…you could be eligible to claim R & D Tax Credits.
How R & D Tax Credits Work
There are two main types of R & D Tax Credit schemes in the UK:
SME R&D Relief – For small and medium-sized enterprises with fewer than 500 staff and a turnover under €100 million or a balance sheet under €86 million. SMEs can claim up to 186% of their qualifying R&D expenditure as a tax deduction.
RDEC (Research and Development Expenditure Credit) – For large companies or SMEs that have received certain types of state aid or grants. The RDEC rate is currently 20% (taxable), but it still offers significant financial benefits.
Example Scenario
Imagine a small engineering company that invests £100,000 in developing a new, more efficient production process. Under the SME scheme, it could claim an enhanced deduction of £186,000 against taxable profits. If the company is loss-making, it could instead receive a payable tax credit of up to 10%–14% of the surrenderable loss, putting actual cash back into the business.
Qualifying R&D Activities
One of the biggest myths about R & D Tax Credits is that they only apply to high-tech or scientific industries. In reality, qualifying activities are far more diverse. The HMRC criteria focus on whether the project aims to resolve scientific or technological uncertainties — and that can happen in many contexts.
Examples include:
Software Development: Creating bespoke systems or improving functionality.
Manufacturing: Designing more efficient production methods or using new materials.
Food and Beverage: Developing new recipes with unique textures or nutritional benefits.
Engineering: Solving mechanical design challenges.
Renewable Energy: Improving energy efficiency in processes or systems.
Why Many Businesses Miss Out
Despite the generosity of the scheme, a surprising number of businesses never claim R & D Tax Credits. Common reasons include:
Lack of awareness: Many companies don’t realise their work qualifies as R&D.
Fear of complexity: The rules, definitions, and documentation requirements can feel daunting.
Under-claiming: Businesses that do claim often fail to include all qualifying costs, such as staff wages, subcontractor fees, consumables, and certain software expenses.
The Role of Expert Accounting Services
This is where the right accounting partner becomes invaluable. At Coxhinkins, our accounting services go beyond traditional bookkeeping and compliance. We take a proactive approach to identifying, calculating, and substantiating your R & D Tax Credit claim.
Here’s how we add value:
Eligibility Assessment – We work with you to review projects and identify qualifying activities you might not have considered.
Detailed Cost Analysis – Our team ensures every eligible cost is captured, from payroll to consumables.
Technical Narratives – We prepare HMRC-compliant reports that clearly explain the scientific or technological uncertainties involved.
Risk Management – By aligning claims with current HMRC guidance, we reduce the risk of enquiries or penalties.
Strategic Advice – We help you integrate R&D planning into your broader tax strategy, maximising cash flow and growth potential.
Common Misconceptions About R & D Tax Credits
“Only tech companies can claim.”
False. Many traditional industries carry out qualifying R&D without realising it.
“We’re too small to bother.”
Even micro-businesses can benefit. In fact, SMEs can sometimes see proportionally larger gains.
“It’s too complicated.”
With expert accounting services, the process becomes straightforward. At Coxhinkins, we handle the heavy lifting so you can focus on innovation.
How Much Could You Claim?
The potential value of a claim depends on your size, tax position, and qualifying spend. For SMEs, the benefit can be worth up to 33p for every £1 spent on qualifying R&D. For large companies, it’s closer to 16p per £1 under the RDEC scheme.
Potential Benefit Breakdown for SMEs
| R&D Spend | Potential Additional Deduction (186%) | Cash Benefit (Loss-Making) |
|---|---|---|
| £50,000 | £93,000 | ~£12,000 – £15,000 |
| £100,000 | £186,000 | ~£24,000 – £30,000 |
| £250,000 | £465,000 | ~£60,000 – £75,000 |
Why Choose Coxhinkins?
Our reputation is built on delivering precise, compliant, and maximised R & D Tax Credit claims. But more importantly, we see these claims as part of your wider business growth strategy.
By combining R&D tax expertise with our full suite of accounting services — from statutory accounts and corporation tax returns to business advisory and cash flow planning — we give you a holistic approach that keeps your finances healthy and your innovation pipeline strong.
The Coxhinkins Process
Discovery Call: We learn about your projects and business goals.
Technical Analysis: Our R&D specialists review your activities and costs.
Claim Preparation: We compile a robust submission, including technical narratives and cost breakdowns.
Submission & Follow-Up: We handle the filing with HMRC and respond to any queries.
Future Planning: We help you integrate R&D into your ongoing strategy, ensuring you claim every year.
The Bigger Picture: Innovation as a Business Asset
Claiming R & D Tax Credits isn’t just about recovering costs — it’s about recognising innovation as a core driver of value in your business. Each claim improves cash flow, funds further research, and strengthens your competitive position.
At Coxhinkins, we’ve seen clients use R&D tax relief to:
Launch entirely new product lines
Expand into new markets
Invest in sustainable manufacturing
Hire specialist staff to drive growth
How to Get Started
If you suspect your business might qualify for R & D Tax Credits, the best time to act is now. You can typically make a claim for the previous two accounting periods, meaning missed opportunities can still be recovered.
A short consultation with our R&D tax team at Coxhinkins could reveal thousands — or even tens of thousands — in potential benefits you didn’t know were available.
Final Thoughts
Innovation deserves recognition — and R & D Tax Credits are the UK government’s way of rewarding it. But like all tax incentives, the real value lies in how effectively you claim them.
By working with Coxhinkins, you’re not just accessing expert accounting services; you’re gaining a partner dedicated to maximising your innovation rewards, safeguarding your compliance, and helping you turn ideas into growth.
Ready to find out how much you could claim?
Contact Coxhinkins today and discover how our accounting services can turn your R & D activities into a powerful financial advantage.