R&D Tax Credits Services Manchester | Research and Development Tax Advisors
R&D Tax Credits Explained. What Are They? Can I Claim?
Research and development (R&D) tax credits are a fantastic government scheme that is designed to reward limited companies involved in any projects seeking an advance in their industry using any technologies and scientific principles. We provide R&D Tax Credits services from our HQ in Manchester.
- Your company could claim back as much as 33p for every £1 spent on qualifying expenditure.
- If your company is developing new, or tweaking and enhancing any products, materials, systems, processes, devices or services you could qualify.
- You can recover money from failed/shelved projects in addition to successful ones.
- This form of tax relief is often used instead of or in combination with other business funding options and grants.
- The government rewards companies trying to enhance their industry by providing substantial reductions in future tax liability or by providing cash rebates that can be invested directly back into your business.
How Exactly Do R&D Tax Credits Work Then?
To make the most of this type of scheme, it is important you are aware what qualifies for a legitimate R&D claim and what doesn’t.
If your business is attempting to enhance any area of your business where the actual end result is still relatively uncertain, and that you’re overcoming issues when it comes to moving the project forward then you may be eligible to claim.
If after speaking to our expert R&D advisors we identify a claim, you can recover your qualifying spend for the last two open tax years.
If you’re year-end is approaching, it’s imperative to contact us immediately as the government will only allow the last two years to be claimed. If one of those open tax years passes by, then sadly the government won’t allow you to claim for that year.
Our expert specialists will help you identify all of your qualifying R&D expenditure and then distil this information into a report that will be presented to the government on your behalf.
Research and development tax credits exist to help businesses thrive and to encourage UK businesses to continue our long and proud history of inventing and developing world-changing inventions.
The government reason that for every pound they give a business, they recoup roughly six pounds back on a multiplier basis. They pay you and you invest the money in your business. You pay more wages that are subject to tax and NI. Then, these wages are taxed again when spent on goods carrying duty i.e. cigarettes, alcohol, petrol etc.
R&D Tax credits are by far the most lucrative tax incentive available to UK businesses.
OK, so the UK government currently provide businesses who qualify an additional 130% accelerated relief for every £1.00 of qualifying expenditure identified.
It is this combined pot of valuable research and development tax relief that has the effect of substantially reducing your future tax liability and when the applied tax deduction creates a loss, then your business will receive an immediate tax rebate which can be viewed as a kind of cash voucher from the government for your business.
Cash rebates are normally paid back to your business in as little as six to eight weeks.
How Can We Be Sure Our Business Qualifies?
So What Expenditure Qualifies for R&D Tax Relief?
As this incentive was designed to help businesses succeed, thankfully the governments’ guidelines are broad.
The treasury wins when your business does.
The main requirements for a claim are that you are trying to secure an advance in science or industry using technology and/or science in a way that hasn’t been done before.
Designing new products, processes, systems, materials, prototypes (even if the project failed)
Enhancing, tweaking, and modifying any products, services, processes (even if the project failed)
Many business owners continually look for ways to advance their company.
If the exact process of development isn’t clear to you or a competent specialist in the field and you are taking steps to overcome any barriers preventing the success of the project, then you will more than likely qualify for an R&D tax claim.
Remember, the government fully accept that many projects will fail and they will reimburse you for trying to secure the advance in your industry all the same.
So what can I claim for?
Our experts specialist advisors will identify all areas of company expenditure that qualify for a claim.
Company costs that can be recovered include:
Expenditure on sub-contractor costs
Up to 100% of peoples wages, NI contributions, bonuses and pensions contributions.
Expenditure on software used in the qualifying project.
Expenditure on consumables including electrics and lighting, gas all the way through to raw materials and anything else that forms part of the project.Then add 130% to the qualifying pot of expenditure.
R&D Tax Credit Solutions UK - What Could Your Claim Be Worth?
X20% Corporation Tax = £13,000.00£13,000.00 / £50,000.00 = 26%
£50,000.00 +£65,000.00 Enhanced Relief = £115,000.00
£115,000.00 x 14.5% Surrender the Loss Rate = £16,675.00 CASH REBATE£16,675.00 / £50,000.00 = 33.35%
X20% Corporation Tax = £65,000.00£65,000.00 / £250,000.00 = 26%
£250,000.00 +£325,000.00 Enhanced Relief = £575,000.00
£575,000.00 x 14.5% Surrender the Loss Rate = £83,375.00 CASH REBATE
X20% Corporation Tax = £130,000.00£130,000.00 / £500,000.00 = 26%
£500,000.00 +£650,000.00 Enhanced Relief = £1,150,000.00
£115,000.00 x 14.5% Surrender the Loss Rate = £166,750.00 CASH REBATE£166,750.00 / £500,000.00 = 33.35%
X20% Corporation Tax = £260,000.00£260,000.00 / £1,000,000.00 = 26%
£1,00,000.00 +£1,300,000.00 Enhanced Relief = £2,300,000.00
£2,300,000.00 x 14.5% Surrender the Loss Rate = £333,350.00 CASH REBATE£333,500.00 / £1,000,000.00 = 33.35%
What Things Affect Research and Development Tax Claims?
Many things can affect the overall benefit of an R&D Tax Claim.
The list of points mentioned below doesn’t mean you can’t claim, just that the overall value of the claim may be affected slightly.
Even if this is the case, the overall benefit to your business would still be substantial and so you should call our specialist advisors now to discuss your claim.
I use subcontractors, will this affect my claim?
Where subcontractors and external skills are utilised during an R&D project then you can recover up to 65% of their costs.
We work with a lot of companies that are contracted in to conduct the R&D on behalf of another company. If this applies to your company, you can still claim under the governments RDEC scheme.
Identifying your full, true legal entitlement can be a difficult task but thankfully our specialist advisors are here to help manage this process on your behalf.
If you would like to find out how much your business could be owed call us now.
I’ve heard if I’ve benefitted from grants and subsidies this may affect my claim – how is that?
If your business has received any subsidies and/or grants, then it could be that your need to apply for tax relief under the governments RDEC scheme.
In most cases, the research and development tax benefit are paid at a rate of 11% where grants are involved.
In our experience, there are a lot of nuances with most claims depending on your immediate and historic circumstances and for that reason, if you have a project you would like more clarity on, call one of our specialists now.
But then, I have a business abroad too…
As long as you are a UK tax payer you may still be able to claim even if your business is based abroad.
Providing your business has taken steps to enhance your industry and has been involved in any qualifying activities then you should still be able to make a claim but as is often the case, this is a grey area that really should be looked into and resolved by one of our experts.
There are several companies in our group, are we still a small to medium enterprise (SME)?
There are several legal definitions that must be met to establish if your business is linked to another company.
Turnover, the number of employees, assets and other areas are all things that need to be considered.
If after going through a simple task to determine your status, it could be that your claim has to be processed under the governments RDEC R&D scheme which was introduced to help larger companies.
Our advisors are happy to help with any project that may still owe you money. It’s free to find out so if you have any questions we can help you with, please give us a call now.
Understanding exactly what rules apply to your business and what qualifies and what doesn’t can make the difference to a claim being declined, and a claim worth tens-of-thousands of pounds being accepted.
If you have been involved in any projects call one of our specialist advisors now and they will help you quickly identify how much money you could be owed.
If we feel there is any entitlement to recover, our extended team will help you get your money back in as little as six to eight weeks.
All this sounds fantastic, but I’ve not paid NI or PAYE earnings.
Some time ago this would have caused a problem. Thankfully the government abolished those rules in 2012 and allows a business to claim for any embedded costs hidden within the business.
Again, where it’s not immediately apparent to the layman if there is a claim, it is important to talk to the experts who can quickly identify your businesses true eligibility.
Hamilton Wood & Company are proud to be a leading R&D tax credits specialists Stockport, Greater Manchester, UK.
To speak to one of our R&D tax credit experts call 0161 791 1401 now.