The business world can often have its challenges, especially if you’re a small business in which cash flow is vital.The R&D tax credits scheme is a beneficial tax relief which has been in place since 2000. However, many businesses are still not aware it exists, and many don’t realise they’re eligible to make a claim, which would give some of them the financial boost they need.
R&D Tax Relief Explained
The scheme was brought in by the government as an incentive for UK businesses to become more globally competitive in the fields of Science and Technology. It rewards businesses who invest in research and development (R&D) aimed towards technological advancements. This can be something as simple as an improved IT process or an enhanced product.
- Businesses must prove their project’s outcomes were not predictable i.e. no competent professional in their field had the knowledge to derive the advancements being sought.
- You must be liable for Corporation Tax and have a UK LTD company.
- Claims must be made within the company’s last two financial years.
The Financial Boost You Need
How much can I claim?
How much you can claim depends on a variety of factors including the size of your company, your profitability and any grants or subsidies you’ve received. You’ll usually be able to claim anywhere from 8% to 33% back on qualifying projects. You can even calculatehow much you may be owed using an R&D tax credits calculator.
What costs can I claim for?
Qualifying expenditure includes direct costs for staff, external workers, software and materials involved in the R&D project. Capital expenditure is a more complex area, and advice should be sought if you think these costs should be included. Businesses across a wide range of sectors can qualify as long as the R&D project relates to advancements in Science and Technology.
What if I’m making a loss?
You can still claim. Although R&D tax relief is usually received via a reduction in Corporation Tax, those companies making a loss often receive a cash sum instead. You can also make a claim if yourproject was unsuccessful or it had to be abandoned, as long as you can demonstrate your investments were aimed towards making scientific or technological advancements at the time.
How long before I receive my repayment?
The turnaround time from submitting your claim to receiving your repayment should only take a few weeks.HMRC try to deal with 95% of claims within 28 days of receipt.
Making a Claim for R&D Tax Credits
Your R&D tax relief claim should be submitted to HMRC, but you can choose to use an R&D tax credits specialist to handle this on your behalf. A specialist will be up to date on the latest HMRC legislation and often have built great relationships with claims assessors already. They can provide you with support and assistance to make a claim, and can offer you more information on R&D tax credits. This will save you time and maximise your chances of success.
Don’t miss out on the financial rewards available for your hard work and investments.