Can I still claim R&D tax credits if I don’t pay any PAYE and NIC?

You can still claim research and development (R&D) tax credits if you don’t pay any PAYE and national insurance contributions, as long as you would otherwise qualify.

Before 2012 this was not the case, thankfully this ruling has been reversed.

Claiming R&D tax credits using the SME R&D tax credit scheme with no PAYE or NIC

Until 2012, you could not claim an R&D tax credit if you had paid no PAYE or NIC. Typically, this rule would exclude companies in the start-up phase which did not pay salaries. But with this rule abolished, you are now free to claim.

As well as salaries and employer national insurance contributions, any pension contributions and money spent on subcontractors and freelancers also qualify as R&D expenditure. There are other costs that may be applicable too. These include the cost of materials used up in the R&D process, and consumables like heat, light and power. Some software costs also qualify.

How Recoup Capital can help companies using the SME scheme

It is often salaries that form the bulk of an R&D tax credit claim. But some projects will contain substantial other types of expenditure that make claiming worthwhile. If you are an innovative SME that pays no PAYE or NIC, you should contact Recoup Capital for an eligibility assessment.

We can help you to review your qualifying R&D activities and costs so that you can understand what your claim might be worth or you can see for yourself here