Your company may be missing out on a valuable form of tax relief if you are involved in innovation or research. Research and Development Tax Credits aren’t widely known and require you to jump through some hoops but can potentially be worth thousands of pounds, even if you’re an SME.
According to HMRC:
“R&D is a Corporation Tax (CT) tax relief that may reduce your company’s tax bill if your company is liable for CT or, in some circumstances, you may receive a payable tax credit.”
R&D Tax Credits were first introduced in 2000 and allowed companies to claim back part of their research and development costs against their Corporation Tax liability. In 2013, however, the scheme was amended to make it easier for SMEs to benefit; you can now claim even if you have NO Corporation Tax liability and take it as cash or applied against certain other liabilities your company has incurred.
Your company doesn’t have to be breaking grand frontiers to qualify for R&D Tax Credits; you need to be working towards doing something new within your industry through technological or scientific innovation. You can even qualify if you are doing research as a subcontractor. If the R&D is ongoing you can qualify every year, and you don’t have to be showing a profit in order to benefit.
You can claim the tax credits on a wide variety of costs, including staffing, materials and subcontractors. Anything that would normally fall under a claim against Corporation Tax could be eligible under this scheme.
At the moment SMEs can claim 24.7% of their eligible costs as a tax credit if they’re in profit. If they are making a loss you have a choice; you can take the credit against your future Corporation Tax or get it as a cash payment towards your PAYE and NIC liability for staff involved in your R&D.
This is a valuable benefit so naturally, there are steps to establish if and how much you can claim. It’s not a simple matter of pulling numbers from your accounts, as this may have you including non-eligible cost or missing out on expenses you hadn’t considered.
To make sure you get everything you are entitled to, it is worth going through a specialist like researchdevelopmenttax.com. They work on a no-win, no-fee basis so you can apply with confidence that if you’re NOT eligible, you won’t lose out. Their application process works like this:
After the meeting, they will get the relevant figures from your reported accounts, present them in the correct format and make the application on your behalf. Depending upon your accountant, this typically takes a couple of weeks.
Your final rebate will usually come through within two months, based upon HMRC’s processing time. It’s as simple as that.
There’s nothing to lose by applying and the result could save your company thousands.
To determine if you could be eligible, just complete the brief R&D Questionnaire below…
We will get back to you within 48 hours to let you know if we think that you could be eligible to claim Research and Development Tax Credits.