Are you missing out on R&D Tax Relief?

R&D Tax Relief has been created as a corporation tax relief that may reduce a company’s tax bill with the intention is to encourage investment into Research and Development and new product development.

Administered and run by the HMRC, it has a view to helping UK businesses and the economy alike, grow.

Stockport based accountants Bennett Verby offer some insight into how it may help you to grow your business.

R&D Tax Relief Overview:

• As an SME, you could be entitled to 230% relief on your R&D costs incurred.
• You can save money on your corporation tax bill.
• You don’t have to develop something from scratch, as long as you are investing in the improvement, process or service, you could be entitled.
• Ask for assistance to ensure your claim is maximised.

R&D Tax Credits

It is possible to claim a payable R&D tax credit for an accounting period in which it has a tax loss arising from the making of the R&D claim.

Tax relief for Research and Development

Do you employ engineers, software developers, technicians or scientists? Have you developed a new or improved product or process? Have you developed software in-house? Are you a Small or Medium-sized Enterprise (SME) that has subcontracted to any of the above?

If you have answered ‘yes’ to any of these questions then you are most probably entitled to claim R&D tax credits.

This article briefly outlines what you need to know about R&D Tax Credits and how we can help you with a potential claim.

Are You Eligible?

You can claim for R&D tax relief if your project seeks to achieve an advance in overall knowledge or capability in science or technology.

Your project doesn’t have to have been a successful one. As long as it falls into one of the above categories you are still able to obtain relief.

Claims can be made on any costs you have made in the last two years.

What Could It Be Worth To Your SME Business?

If you make a successful claim, there could be numerous benefits to your business.

The relief available under the SME scheme can be worth up to 230% of the actual costs incurred. For example, if a company spends £100,000 on qualifying R&D expenditure, they would receive a deduction of £230,000 on submitting a claim for R&D relief.

In order to qualify for the SME scheme, the organisation must be a limited company with fewer than 500 employees and an annual turnover not exceeding €100m or a balance sheet not exceeding €86m.  

What Can You Claim Against?

It is possible to claim R&D relief on revenue expenditure (i.e. the running costs of the business and not capital expenditure on assets) such as: 

• Employee costs
• Materials
• Utilities
• Software
• Subcontractor costs
• Grants and Subsidiaries

Thanks To Juliet McLeod at Bennet Verby for her contribution to this article.