Employed vs self-employed: what to consider when claiming R&D tax relief

July 24th, 2020

We have this conversation with all our R&D (research and development) clients: the difference in the rate of tax relief between PAYE employees and sub-contractors.

Many reasons determine whether an individual is employed or self-employed; far too many to list within a short piece.

When the business has driven the situation – perhaps due to the number of guaranteed hours available or the wider cost of employee benefits – what they often haven’t considered is the R&D tax relief available against that person.

If an employee performs qualifying work equal to 50% of their annual time spent, you can claim 50% of their Gross salary, Employer’s National Insurance Contributions and Employee Pension Contributions. However, if a sub-contractor spends 50% of their time on qualifying work, your claim would be restricted to 65% of 50% of the sub-contractors’ invoices.

With this in mind, self-employed contractors are not always the cheapest option for a business.

To discuss the nuances of R&D tax relief in more detail, contact David Herd at david.herd@championgroup.co.uk or call 0161 703 2500.


BACK TO NEWS PAGE »
Latest News

New Lockdown Grants Announced

January 5th 2021

Following on from last night's announcement by the Prime Minister, that the country has been plunged...

Champion Round-Up | Wednesday 2nd Decemb...

December 2nd 2020

Written by Ged Cosgrove, group managing partner  As we find ourselves entering a new phase of tier...

Focus
management accounts

Xero | Making Tax Digital Why Xero accounting is the digital tax platform for you ...

management accounts

Sage Business Cloud | Making Tax Digital Why Sage Business Cloud or Sage 50cloud is...

SPOTLIGHT ON R&D

Veya

Veya

Around 30 per cent of all residential property transactions arent successful. Veya has been launched to reduce that statistic by removing the frustrations that buyers and sellers face during property transactions.

Our Tweets

Champion Accountants

Growth Protection Core Support Menu
Contact