R&D Tax Credits Leeds | Specialist Research and Development Tax Advisors
What Are R&D Tax Credits and How Can They Help Your Business in Leeds?
Research & Development (R&D) Tax Credits are an extremely beneficial government incentive that rewards UK businesses who are seeking to enhance their industry or business via the pursuit of innovation.
This initiative can see UK limited businesses recovering as much as a third of their eligible investment cots back, in most cases as a cash lump sum in just six weeks to eight weeks
- R&D Tax Credits are worth between 0.25p-0.33p back on each pound invested in trying to secure a competitive advantage.
- An average recovery is worth over £42,000.00
- The government will reward UK businesses striving to achieve and advance, even if your project failed or has been shelved.
- Up to 100% of people’s wages, pensions and national insurance contributions can be recovered.
- You must be seeking to resolve any technical or scientific uncertainty to achieve an advance.
- All UK Limited companies could qualify.
- These tax credits are used most often to fuel a business’s growth and is often used in combination with additional business loans and business finance.
- R&D Tax Credits are by far the most attractive incentive for UK business owners at the time of writing.
- This incentive forms part of the UK’s industrial strategy that will be key to the UK economy and business community post-Brexit.
R&D Tax Credits in Leeds: Example
As a rule of thumb, when all eligible spend that has been funnelled towards a qualifying project have been identified, the government will provide an enhanced 130% on this pot of money.
The return for your business is dependant on its status e.g. whether it is operating in profit, or not.
For most SME’s, when the benefit is applied, this has the effect of creating a loss in the business and what this means is that the figure can be ‘surrendered’ to the government which means that you can effectively cash the loss in, for an immediate cash rebate worth £33,350.00 for every £100k of qualifying spend identified.
If your business is operating in profit, if a loss doesn’t occur, this is still a powerful way to drastically reduce your corporation tax bill moving forwards. For every £100k of qualifying spend identified, you can expect up to £25,000.00 off your next tax bill.
What Are R&D Tax Credits Worth?
- If your business is operating at a loss, you can recover up to £33,350.00 for every £100k of qualifying spend identified.
- If your business is in profit, you can expect to reduce your next corporation tax bill up to £25,000.00 for every £100k of qualifying spend identified.
*When you understand that up to 100% of people’s wages, Class 1 National Insurance Contributions and Pensions can be recovered you can see how the figures quickly stack-up in your favour.
We’re Based in Leeds, Does My Business Qualify?
The UK government are keen to help your businesses like yours succeed and as a result the guidelines are broad in terms of what business activities qualify regardless of region.
It is estimated, that for every £1 the treasury issues back to a business, that the government retrieve around £7 back on a multiplier basis.
The funds they issue back to a business help to drive your business and the economy forward.
Funds are reinvested in businesses and are often issued in staff wages that are subject to tax and N.I. and then these wages are spent on goods that carry duty, cigarettes, alcohol, petrol, in addition to the vendor of these goods also being taxed.
The key requirement for a recovery is that your business is working to overcome any technical or scientific uncertainty that stands in the way of an advance being achieved. It is important to mention that the overall advance has to be significant and not easily deducible by a competent individual.
You must be trying to appreciably improve or enhance any areas of your business process, systems, devices, materials, devices etc. in a new and improved way.
To Claim, Your Company Must Be:
- Tweaking, modifying and enhancing any services, products, processes, devices, materials (even if the project was shelved or failed)
- Researching and Designing new systems, materials, products, processes, prototypes (even if the project was shelved or failed)
- Eligible to pay UK corporation tax
- A UK limited business registered with companies house
Most business owners seek new ways to advance and enhance their business.
Where the next steps to securing an advance or the way-forward seems uncertain, providing that you and your team are taking the appropriate steps to try and move the project forward to the best of your ability, then you can recover large sums of the money you invest in the project whilst striving to achieve the advance via an R&D tax relief claim.
If your business is in the UK and you’re unsure if your recent projects could qualify give our experts a call now and we will be happy to advise on your case.
We are recognised as trusted partners to members of the Institute of Chartered Accountants in England and Wales (ICAEW) and the ACCA.
What Expenditure Can My Company Claim For?
Areas of company expenditure that can be recovered by your business include:
- Up to 100% of people’s wages, NI contributions, bonuses and pensions contributions.
- Shelved/Failed Projects
- Expenditure on consumables including electric and gas through to materials and other consumables used up or transformed as part of the project.
- 65% of sub-contractor costs
- Expenditure on software used in the qualifying project.
Call our specialist advisors now for initial free guidance and support with your claim.
We work on a success only basis, and should we fail to identify a claim, there is no charge for our time. In other words, we work purely on a no-win, no-fee basis.With an average recovery being worth over £42,000.00 we are not talking small change here. These funds can be back in your business in just 6-8 weeks.
Research and Development Tax Credit Calculation
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
£83,375.00 / £250,000.00 = 33.35%
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%
My Business Has Benefitted From Subsidies and Grants to Support Its Growth; Will This Affect My Claim?
If the above statement is true then it could be that your need to apply for tax relief under the governments RDEC scheme.
RDEC is paid at a rate of 11% where grants are involved.
If you have a project you would like more clarity on, call one of our specialists now. In our experience, there are a lot of nuances with most claims depending on your immediate and historic circumstances.
If your business is based in Leeds you can call one of our R and D tax specialists and business funding advisors now on 0161 791 1401 or click here to request a free call-back.