R & D Tax Credit
Is your company eligible for research and development tax relief? Unfortunately, many business owners don’t believe that they qualify for R&D tax relief as they think it’s only for substantial scientific breakthroughs. But R&D tax credits are designed to encourage investment in innovation, whether that’s developing a new process, product, or service either internally or for a customer, you could qualify.
For most SMEs, advances are in technology. An improvement to an existing product or process may be sufficient for a claim. If your company has been engaged in a project that seeks to achieve an advance in science or technology, it is carrying out R&D. This extra money could be used to reduce your tax bill or increase your taxable.
The tax relief can be taken as a reduction in the corporation tax bill for profitable companies or as a repayable tax credit for companies not making taxable profits. The primary qualifying cost is the payroll cost of staff (including directors) involved in the R&D process, but you can also include certain overheads and 65% of subcontracted R&D.
The relief for SMEs is currently 230%. That means that for every £1 of qualifying expenditure your company makes, it receives an additional £1.30 of relief.
We will help you establish what activity and costs will qualify before claiming the corporation tax return. There is a time limit of two years after the end of an accounting year for making a claim, so if you haven’t done one and think you may qualify, there is time to make a retrospective claim.
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