The short answer is that if your business undertakes any element of research and development, there is tax relief available which could help you reduce your company tax bill.
When it comes to the R&D tax credits here are 8 things you may not have been aware of:
1. If yours is a small or medium sized company (i.e. you have less than 500 employees and your revenue doesn’t exceed £100m) and in profit, you can recover up to 26% of your annual expenditure – this means if you spend £100,000 on R&D linked activities you could be able to recover £26,000
2. However if you are not quite at the revenue-generating stage you can also benefit; you could be able to recover up to 33.35% which means your relief would be close to £34,000 if, again, you spend £100,000 on R&D each year
3. If you are just getting started and have not yet reached a size that makes you eligible to pay Corporation Tax, National Insurance or PAYE you could still benefit and receive a tax rebate
4. Meanwhile if you are a large company (i.e. you have more than 500 employees and your revenue exceeds £100m) you could claim up to 6%; this means if you spend £100,000 a year you could be recovering £60,000 of R&D tax credit benefits.
5. The benefits of R&D tax credits includes any development work that you’ve subcontracted to a third party not just R&D work you are undertaking yourself
6. The relief is not just meant for traditional 'science-led' companies, it is for every industry as long as you can prove you are actively involved in researching and developing new ideas and innovation (we’ve already helped a growing number of clients that ranges from food & drink companies to the designers of bespoke website applications)
7. Similarly R&D tax credits aren’t limited to the development of something brand new, you can also claim for relief if you are developing an idea that already exists or if you are improving an existing product or process
8. And the research and development you are claiming for does not have to be a success, it just needs to have been undertaken and undertaken to achieve a technological advancement
The potential application and benefits of R&D tax credits are vast; the only thing is, as it all too often the case, the detail has been stretched across hundreds of pages of regulations and explanation. The complexity of making a claim can often be off putting when you are busy running your own business and this is where we are able to help.
We've worked successfully with a number of businesses, helping them to identify areas where they have a claim and then working through the complex application process and liaising with HMRC to ensure that they receive the correct tax relief due to them. Click here to read about one company we helped with their R&D claim.
If you think you could be eligible for R&D tax relief please contact me and I'll be happy to discuss – free of charge and without obligation - your business and your approach to research and development and ascertain whether you may have a claim.