The R&D (research & development) tax relief scheme aims to reward businesses for innovation in the fields of Science and Technology, but it’s thought that 90% of eligible companies are not claiming what they’re owed, missing out on the benefits available.
5 Benefits of R&D Tax Credits
- Great rates for SMEs
Unfortunately, many small businesses are unaware of the scheme or do not think they qualify. However, the R&D SME scheme offers businesses the chance to reclaim between 8%and33% on qualifying project expenditure. This includes the costs of staff wages, subcontractors, consumables, materials, software and sometimes utilities. You can even calculate how many R&D Tax credits you could be owed before starting the claims process – check out this R&D Tax Calculator.
- You don’t have to be profitable to claim
Many receive R&D tax reliefthrough a reduction in Corporation Tax owed, but if you’re making a loss, you can get cash credits instead. This gives many businesses the financial boost they need.
- Projects don’t have to be successful
The purpose of the R&D tax credits scheme is to reward innovation. Even if your project wasn’t successful or even abandoned, you can still claim on your investment. It only matters that the purpose of your project was aimed towards technological advancements. It is the “intent” which matters.
- It creates a positive business cycle
Investing in R&D projects could lead to advancements that will help develop new and enhanced products, services and processes.Reclaiming R&D tax credits give businesses the opportunity to invest in further projects, creating a positive cycle for business and industry growth.
- The UK will become more globally competitive
The aim of the scheme is to ensure the UK can become globally competitive which is not only great for the economy, but for UK businesses to thrive. It doesn’t matter what industry you’re in as this type of project spans over a whole range of sectors. Those making claims can include businesses in Manufacturing, Food and Drink, Aviation, Land Remediation, Software, and Engineering, and so many other sectors, there’s too many to mention here.
Am I Eligible for R&D Tax Credits?
To qualify, several criteria must be met.
- You must be liable for Corporation Tax.
- You have an UK LTD company
- There must’ve been an element of technological uncertainty i.e. a competent expert doesn’t have the capability to derive the advancement you’re seeking.
- Claims must be made within the company’s last two financial years.
Making a claim for R&D tax credits
To make an R&D tax claim, you’ll need to submit your application to HMRC. However, many businesses choose to use a specialist to assess their eligibility and prepare their claim on their behalf. Benefits of this include maximising your chances of success, simplifying the process and making it less time-consuming. It also lowers the risk of under- or over-claiming. R&D specialists are completely up to date on the latest legislation and have a good relationship established with HMRC. They can also give you more information on R&D tax credits if you need help and support.
Don’t miss out on all the advantages of R&D tax credits, rewarding your hard work and investments.
