R&D tax credits

Unincorporated business

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I was just wondering if there was anything similar to R&D tax credits for an unincorporated business?

I had never really thought about it before but a new client has design expenditure so I am wondering whether they are missing out (by not being incorporated).


Replies (5)

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By Wilson Philips
07th Jun 2021 17:15


Thanks (1)
By Hugo Fair
07th Jun 2021 18:53

+1 to the actual question.
??? to the second near-question ('wondering') - given the near infinite unknowns.

Thanks (2)
By Matrix
07th Jun 2021 22:23

Thanks both. Will mention both the incorporation and R&D but I don’t think they want to change (30+ yr old business and too much hassle/history).

Are you aware of any structures where the business can outsource the R&D to a company? So retain sole trade and move the design to a company?

Thanks (0)
Replying to Matrix:
By John Mapother
10th Aug 2021 16:54

The only way I know would be to set up a separate limited company and then subcontract the sole trader to do the R&D. However, this is the reason HMRC introduced the cap on credits, based on the NI and PAYE payments, as a fair amount of companies were gaming the system and claiming huge credits. Because of this the maximum credit you would receive would be £20k, assuming the new company doesn't employ anyone.
Hope that helps

Thanks (1)
Replying to John Mapother:
By Matrix
11th Aug 2021 07:18

Thanks John. The numbers were too small to put any structure in place for this client. However this post has had loads of views so I am clearly not the only one wondering if sole traders are missing out.

Thanks (0)