R&D Tax Credits: are you missing out?

Research and development (R&D) is bringing rewards to SMEs. It may come as a huge surprise that HMRC wants to reward companies with R&D tax credits.

The UK law has been in place since 2000 but many companies are still missing out.  Stay with me to discover more about R&D relief and how you can access a valuable cash injection for your business.

R&D Tax Credits

Put simply R&D tax credit is a government incentive aimed at rewarding companies investing in innovation and new technology.

Forget ‘white coat’ syndrome it’s not all about scientists in laboratories. In fact the grant can apply to almost
every Limited Company subject to corporation tax. However, you must demonstrate you have transformed the business or transformed one area within a business.

Who can apply for R&D Tax Credits?

Firstly the R&D Tax Credit is available to SME companies. That is a company with under 500 employees, turnover under €100M and assets of under €86M. Secondly, it must be a Limited Company.

Are you due a Research & Development (R&D) Tax Credit?

You don’t have to wear a white coat and work in a lab to be eligible for R&D tax credits. The fact is very few businesses remain untouched by new technology that enhances the organisation in some way. That’s why there’s a strong possibility you may be missing out on a cash tax rebate. What’s more the first claim can be backdated by two years.

Think about any projects your organisation’s delivered in the last two years in line with R&D tax criteria outlined below.

What companies meet the eligibility criteria?

A business that has gone through growth, transformation or change should consider applying.

Looking at this in more detail a company must demonstrate it invested money in developing:

  • products
  • processes
  • services
  • or modifying existing ones

Furthermore, you must demonstrate you’ve taken a commercial risk, with a significant level of improvement or scientific improvement on internal and client-based projects.  For example, if a company enhanced a process on the factory floor that directly improved business, it ticks the R&D box.

How is the R&D Tax Credit calculated?

For an SME sector an enhanced deduction of 130% of qualifying costs from the yearly profit plus 100% of original cost giving 230% deduction. However, tax relief is available at different levels for large companies. That’s why it is always worthwhile speaking to an expert like ammu’s Iain Robertson, to get advice to support your claim.

What if my company is making a loss?

Even if your company is currently making a loss you can still apply for tax relief. Once the tax relief is calculated the enhanced deduction can be surrendered to HMRC to claim back a tax credit. This could be a welcome boost to the economic stability of your business.

Check your eligibility

Why not get started by answering a few simple questions on an eligibility checker

Get in touch

For more information about R&D tax credits that could be hidden in your company call
us on 0141 290 0262 or email iain@ammu.uk