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  3. Do R&D tax credits apply to a sole trader?

Do R&D tax credits apply to a sole trader?

Research and development (R&D) tax credits can only be claimed by companies that are liable to UK Corporation Tax. Sole traders do not pay UK Corporation Tax and, as a result, they cannot claim R&D tax credits.

R&D tax credits are form of Corporation Tax relief and so — if you’re a sole trader — you’re not registered for UK Corporation Tax and cannot make a claim.

Conditions for claiming R&D tax credits as an SME:

  • Company is a going concern.
  • Company is subject to UK Corporation Tax.
  • Company meets the SME thresholds for headcount and turnover or balance sheet assets.
  • The company carries out a trade or future trade to which the R&D activities relate.
  • The R&D activities claimed have not been contracted to the company.
  • Expenditure is deductible for Corporation Tax purposes in the claim period.
  • No grants or subsidies have been received in respect of the expenditure.

At ForrestBrown, we specialise in R&D tax credits and advise innovative businesses on their role in the funding cycle.

Have a question for our team?

It can be complicated to submit an R&D tax credit claim to HMRC’s exacting standards.

Get in touch with our team of chartered tax advisers, chartered accountants, lawyers, sector specialists, former HMRC inspectors and quality assurance experts to access expert guidance for your claims.

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