After reading this, you’ll be able to answer:
- What are R&D Tax Credits?
- How can R&D Tax Relief help businesses?
- How can a company be eligible for R&D Tax Relief?
- Am I too late to claim Tax Credits?
Then most importantly - you’ll have to decide how to use your company’s newfound savings!
What are R&D Tax Credits?
R&D Credits are a reward for your company. Research and Development Tax Credits were developed to inspire companies to improve, to invent, and to innovate. If your company qualifies for R&D Tax Credits, the end of the year provides a very welcome boost in the form of a cash rebate or lowered Corporation Tax.
How can R&D Tax Relief help businesses?
By using this system, not only do pioneering companies gain valuable support, but when used correctly - generate successive cycles of growth. The more research and development you claim Tax Relief for, the greater the return rate. In turn, you can then use the savings made to invest more heavily in research and development, and receive an even greater sum the following year!
These incentives can pay for themselves year after year. For a company to grow rapidly, R&D Tax Credits are an essential opportunity that cannot be missed. By using them, you can save a little more from the taxman, and keep a little more for your company! Just read about tech-startup Avvoka here, and hear about their astounding results!
R&D Tax Credit Eligibility
Research and Development Tax Relief eligibility is far easier than you might think! While ‘R&D’ may conjure images of mad scientists and Bond villains, the scope of the criteria encompasses a vast number of fields, and includes many aspects of business.
Business sectors can vary wildly, from Telecommunications, to Pharmaceuticals, or even Masonry, and any business can qualify for these Tax Credits. With the UK Government guidelines, all you are required to show is that you are:
- Creating new Products, Processes, or Services
- Modifying and improving existing Products, Processes, or Services
And that’s it!
No sci-fi technology required, just your company trying to improve the services and products it is already providing. If you can solve a problem that other companies have struggled with in the past you can qualify!
How can I claim R&D Tax Relief?
Learning how to claim R&D Tax relief is simple. As long as you can prove that you:
- Are a limited company in the UK paying Corporation Tax
- Have carried out qualifying R&D activities
- Have invested money on these activities
Then you’re good to go!
You can calculate your R&D qualifying expenditure in a few easy steps! Just total up everything you’ve spent on:
- In-house Employees (Salaries / Pensions etc.)
- Subcontractors and External Staff directly involved with the project (Up to 65% of their costs)
- Utilities and Materials (Heating / Lighting etc.)
Once you’ve calculated the total costs you have invested over the year, your R&D Expenditure will be 13% of that entire total. These costs are not only going into your company to improve your business, but R&D Tax Credits allow some of that money to be returned, ready for the next financial year!
Is it too late to claim R&D Tax Credits for previous years?
Not at all! If you’ve only just learned that you were previously eligible for R&D Tax Relief then don’t worry. As R&D Tax Credits are a form of Corporation Tax Relief, you have 24 months after the accounting period to amend this mistake. Two years' worth of Tax Credits could be waiting for you to claim right now, so waste no time and contact a member of our team right away!
While fortune may favour the bold, R&D Tax Credits favour the well-informed. With the right information and calculated planning, you can use R&D Tax Credits to increase your savings, and invest more heavily in the success of your business.
Any questions left about R&D Tax Credits? Or simply want to learn more about how they work? We have a complete in-depth guide available here.
So what are you waiting for? Claim today, and save tomorrow!