Research and Development (R&D) tax credits have been available to businesses for many years but often remain overlooked. Businesses are missing out on a valuable tax relief that can reduce corporate tax bills.
At their most basic, R&D tax credits can be applied to technology and science-led projects that seek to make an advancement to that technology or science. They are designed to encourage and support innovation by small and medium enterprises. Businesses are often surprised at exactly what meets this broad definition.
To make a successful claim, a business must be able to demonstrate that it is seeking to achieve a scientific or technological advancement and seek to resolve associated uncertainty around those scientific or technological advancements.
If you're new to R&D tax credits or just started a new project, we can assess whether you're eligible to claim. HMRC are increasing their enquiries so it's essential that you check your eligibility before claiming.
Why should you claim?
It is a valuable relief, allowing a business to potentially claim 230% of qualifying costs against corporation tax and should not be ignored or overlooked. It is also possible for loss making companies to claim a payable tax credit.
As you would expect with any potentially valuable tax relief, it does come with strict criteria. But to help on that first step, here is my guide to the key indicators of qualifying R&D activity:
- Do you employ scientists, engineers, software developers or technicians?
- Have you developed a new product?
- Have you appreciably improved an existing product which increases technology/science in your industry?
- Have you improved an existing manufacturing process?
- Have you conducted in-house R&D?
- Have you developed software in-house?
- Are you a small or medium-sized enterprise (SME) that has subcontracted out any of the above?
If the answer is 'yes' to any of the above, you may have a potential claim. Give us a call so we can assess your project.
Claims can be potentially very generous extending to a wide range of qualifying expenditure, including:
- Staffing costs
- The costs of external consultants and contractors
- Consumable materials
- Clinical trial volunteers
If you believe your business might qualify for R&D tax credits please do get in touch and we can help you evaluate and made a claim. It is worth noting that there is only 2 years from year end to make a claim so don't delay.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.