Research and development Tax Relief is a valuable business incentive that exists the United Kingdom.
What on earth is R&D tax relief?
The R&D tax scheme benefits organisations for investing in pursuing innovation. This initiative was first unveiled in the year 2000 to reward innovative businesses.
For every pound a business puts into a qualifying project, You will get back up to a third of that pound.
Basically, for each £100k of qualifying spend identified that was invested in an eligible project, you will get up to £33,000.00 back.
You can back between 25% and 33% of your eligible spend back.
The incentive was unveiled in the year 2000 to stimulate more companies to invest in seeking to enhance their products, services, systems, devices etc. or develop new ones.
For every £1 the treasury provides back to a company, they state they get a further £7 on an accumulator basis.
The truth is, when your company earns a successful Research and Development award, you will continue to pay employee wages, and then these salaries are then spent on other items which carry duty such as petrol, alcoholic drinks, tobacco and so forth.
This is definitely a case of the Government giving to receive but it's win./win and great for the economy.
So, just how do you claim Research and Development tax relief?
Well for those who have spent company funds seeking to enhance their products or service this may highlight a possible case.
You may even meet the requirements to claim once you've attempted to improve already present products and services.
You have to have invested in qualifying activities but as with all legislation, there can be many 'grey areas' and if you get any calculations wrong, you could expose your business to a minefield of potential problems.
HMRC is currently chasing great number of organisations which have filed inaccurate claims. This emphasises the importance of using specialists to make sure that things go-ahead smoothly.
Just what things might be eligible for Research & Development tax relief?
When you are unsure of the the best way to move forward. When there existed a level of significant technical or scientific uncertainty that had to be resolved hen this could be a sign. It's not that clear cut however, there are as you would expect things you can't claim for.
What matters is that your organisation has attempted to improve its products and/or services. You may do this by striving to address the uncertainty in the project but there are many areas that can cause your business problems if not handled correctly.
How many years can I claim for?
You can claim back two open tax years and no more. When these two years have passed your benefit will be lost and unrecoverable. If you have invested in improving your products and services from the year 2000 onward and never claimed, your business could have lost out on tens, if not hundreds of thousands of pounds that is now lost forever.
- If your tax year end is approaching, contact us now so you don't miss out.
How much is an R&D claim worth to my company?
A typical claim award is now valued at over £45k and this can be back in your company in six to nine weeks.
A lot of the time this comes by means of an immediate cash lump-sum and/or substantial reductions in your CT obligations.
What is the value of a successful Research and Development award for an SME in profit?
A Small to Medium Sized Enterprise (SME) business in profit can get reductions in CT liability of 25%. So, with this in mindit is clear to see why this scheme is growing in popularity.
What is the value of a successful R&D claim for a loss-making SME
A loss-making Small to Medium Sized Enterprise can receive a fast injection of funds by surrendering a loss.
A loss-making SME can expect to recoup around 33% of their qualifying project spend back. E.g. £33,000.00 for every £100k of qualifying spend discovered.
After you realise that as much as 100% of your teams' wages may be reclaimed you will realise just how fast the figures stack-up in your favour.
Costs you can claim back
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If you have any questions relating to your business's projects and/or business funding needs, please make contact now. We'll be pleased to assist you to.