Does your company invest money into developing new products and services?
If the answer is yes, did you know that your business may be eligible for Research and Development (R&D) tax relief?
R&D is a Government tax relief that rewards UK companies for investing in innovation.
Over 4,500 small and medium-sized enterprises (SMEs) claim £250m in R&D tax credits each year, but many companies don’t realise their daily R&D activities may make them eligible.
What counts as R&D?
Whatever size or sector, if your company is attempting to ‘resolve scientific or technological uncertainties’ then you may qualify for R&D tax relief.
For example, a business that develops its activities to increase efficiency, improve quality or generate new products and services may qualify for the scheme.
But your project must have wider relevance and benefit beyond the profit margins of your company.
If eligible, you can claim R&D tax relief on the running costs and expenditure of your project for things like staff, materials, software and utilities.
What makes a company eligible?
There are two bands of R&D tax relief.
1: For SME’s (companies with less than 500 FTE staff and revenue less than €100m or balance sheet assets less than €86m), the tax relief on allowable R&D costs is 230%.
This means that for every £100 of qualifying costs, your company could reduce your corporation tax by an additional £130 on top of the £100 spent.
Loss making SMEs have the option to surrender some of their losses for a payable cash credit from HMRC.
2: For large companies, the tax relief on allowable R&D costs is 130%. So, for every £100 of qualifying costs your company could have the income, on which CT is paid, reduced by an extra £30 on top of the £100 spent.
Either way, you’ll be saving a fair amount on your tax bill.
We can help
There are lots of terms and conditions associated with the R&D tax relief scheme and we’ve advised many companies about which of their activities and projects are eligible.
We’d be more than happy to answer any questions you have about R&D tax relief and help you work out what you’re eligible for.
Give us a call on 01634 298238 or email firstname.lastname@example.org and start saving today.