New information for individuals and businesses claiming for both R&D and Covid aid

Don’t get caught out if you are claiming for both.

New information for individuals and businesses claiming for both R&D and Covid aid

The past year or so has thrown up a lot of changes, not just in our personal lives but also our tax returns.

HMRC like to keep us on our toes and if you made use of the business support that was available due to Covid, but are also claiming for R&D tax credits read on so that you don’t get caught out.

As you will be aware, the government introduced a range of emergency fund schemes to offer support to businesses affected during the events of the past year or so. These included; the CBILS (Coronavirus Business Interruption Loan Scheme), CLBILS (Coronavirus Large Business Interruption Loan Scheme), and Bounce Back Loans. These fund schemes have now been classified as notified state aid.

Capital from the CLBILS and CBILS will most likely count as non-project-specific state aid, while Bounce Back Loans have received small risk status.

Can I still claim for R&D tax credits if I have used a form of Covid aid?

Yes, you can. It can be a bit confusing however, we are advising our R&D clients to keep money from these initiatives separate from their investment capital. This will prevent Covid relief from contaminating their eligibility for the SME (small and medium-sized enterprise) scheme.

Does CJRS (Coronavirus Job Retention Scheme) affect R&D tax relief?

If you made use of the CJRS during the pandemic, and that included employees who would normally be involved in R&D projects, those individuals cannot be considered as being directly involved in R&D during the period that they were furloughed. For clarity, please see the HMRC Corporate Intangibles Research and Development Manual. If you have any questions, please do contact us for advice.

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We are Cottons London, small business accountants and branch of top 100 firm Cottons Chartered Accountants. We specialise in support for small businesses and freelancers in London.

If you would like help with this, or anything else with regards tax, accounting or business planning, please contact us today to set up a remote meeting.

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