How far back can I claim R&D tax credits?
A business must submit its R&D tax credit claim within 12 months of the end of the accounting period during which the R&D activities took place.
To make a claim, the business must complete the CT1 form through the Revenue Online Service (ROS).
If you are required to submit a pre-filing notification, you must do this 90 days before your claim submission, so you should start preparing as soon as possible.
For accounting periods starting on or after 1 January 2024, the pre-filing notification is obligatory for first-time claimants or those who have not made a claim in the preceding three accounting periods.
I have never claimed before, is there anything I need to do?
Yes. First-time claimants must notify Revenue at least 90 days before making their claim. This requirement also applies to companies that have not claimed in the previous three years.
R&D tax credit claims are processed by Revenue as part of your Corporation Tax return. You must make your claim within 12 months of the end of the accounting period.
We recommend producing an R&D tax claim report that justifies the technical advances and uncertainties involved, along with a detailed breakdown of the eligible expenditure being claimed on a project-by-project basis. This is crucial in the event of an audit from Revenue.
I’m worried my R&D tax claim may be late. If so, what will happen?
Unfortunately, Revenue will not accept a late claim.
To make your claim, you are only required to submit a correctly filled-out CT1; if you are cutting it close, focus on your costing analysis to ensure you have gathered the correct R&D expenditure for your CT1 and prepare your technical narrative following your claim submission.
Will Revenue want to look at my company’s wider general tax affairs if I make a claim for R&D tax credits?
Revenue reviews R&D tax claims randomly. In the event of an audit, they will request more details about the R&D work done (where you will need to supply a technical narrative) and a justification for the costs claimed. If this audit reveals that your claim does not stand up to scrutiny, it’s possible that a wider audit could be opened.
To prepare a strong claim that is more likely to withstand an audit, we strongly advise that a claim is supported by a detailed report outlining the technical advancement and uncertainties and providing a detailed breakdown of the eligible R&D costs.
Using a reputable R&D tax advisor to help prepare and submit your claim will show Revenue that your claim was made with a considered approach and is less likely to be suspected for fraud or error.
What if we contracted out our research and development work?
One of the conditions for a company to make an R&D tax credit claim is that the claimant company must carry out the qualifying R&D activity. There are two situations in which relief is available to a company that has not carried out all the qualifying R&D work:
- A company which carries out qualifying R&D activities and pays a university or institute of higher education to carry out qualifying R&D activities can claim. This is limited to 15% of the expenditure incurred by the claimant itself or €100,000, whichever is greater.
- A company which carries out qualifying R&D activities and pays an unconnected party to carry out qualifying R&D activities can claim. This is also restricted to 15% of the expenditure incurred by the claimant itself or €100,000, whichever is greater.
In either case, the company must incur at least the same expenditure on qualifying activities it carried out, and the subcontracted activity must be eligible as R&D in its own right.
The company must also notify the subcontracted party in writing that they may not make an R&D tax credit claim for these activities.
What if some of the R&D expenditure has been funded by a grant or subsidy?
Any expenditure met by any grant aid or assistance from the state, or any public or local authority of any other agency of the state or another relevant EU or EEA member state will not qualify for R&D tax credits.
Any expenditure that was not covered by the grant is still eligible for R&D tax credits. If your grant covers 70% of your costs, but the other 30% was self-funded, you can claim R&D tax credits on this 30%.
How does Revenue pay out the R&D tax credit?
For ordinary R&D costs such as research salaries, you can ask Revenue to pay the credit to your company, use it towards tax you owe, or split it between the two. You make that choice on your company tax return (Form CT1) for each instalment.
Year 1. Compare half your total credit with the threshold for your accounting period. You receive the higher amount, up to the value of your full credit. If your credit is below the threshold, you can receive it all in year one.
- For a company with a calendar financial year, the threshold is €75,000 for the year ending 31 December 2025 and €87,500 for the year ending 31 December 2026.
- If your year ends on a different date, the €87,500 threshold applies when the statutory filing date for that return falls on or after 23 September 2027.
Years 2 and 3. In year two, you receive 60% of the balance left after the first instalment. In year three, you receive the rest.
For example, a company with a €200,000 credit for the year ending 31 December 2026 receives €100,000 in year one, €60,000 in year two and €40,000 in year three.
Separate first-instalment rules apply to claims for qualifying R&D buildings. See sections 2.3.1 and 2.3.2 of Revenue’s R&D tax credit manual.
Which roles can be included in an R&D tax credit claim?
It is not uncommon for an R&D team to consist of many individuals from different parts of the business.
Your R&D project team may include the R&D Manager, Developers, Engineers, Project Co-ordinators, CAD Engineers, Quality Control and Testing Specialists, and Cost Accountants, as well as members of the senior management team.
However, some administrative roles are not eligible, even if they did support the R&D done:
- Any legal or administrative work towards patent applications, sales or licences, records and litigation
- Commercial and marketing activity
- Administration and general support services not exclusively done for the R&D project, including
- Transportation
- Storage
- Cleaning
- Repair
- Maintenance
- Security
We’re an SME with a small project. Is it worth us claiming R&D tax credits?
Absolutely! In fact, the Tax Cloud portal was designed exactly for smaller businesses representing excellent value for money.
Check out our R&D tax credit calculator to work out your claim value and our fees.
How many users can I add per claim?
You can add an unlimited number of users to your account. You can also limit access to just the technical sections so the people who actually worked on the R&D can enter the details of the projects themselves without visibility of financial data or costs.
How do I sign up?
To sign up, simply go to our sign-up page and enter your company information. Our team will reach out to confirm your eligibility for R&D tax credits and finalise your registration.
