Research and Development Claims
What are R&D Tax Credits?
Many businesses don’t realise that they qualify for R&D Tax Credits or that they are not claiming their full entitlement. The R&D Tax Relief scheme has been in existence for over 15 years and nearly £2bn per annum is currently being claimed. On average SMEs are claiming £46,000 each per year.
The small company scheme allows for 130% of spend to be claims.
Who qualifies for R&D Tax Credits?
Any company in any industry may be eligible for R&D Tax Credits. The R&D consideration is if that company isundertaking development activities that seek or achieve an advancement in technology.
A good test to determine if the work undertaken qualifies for R&D relief is whether your project team faced technological uncertainties at the start of the project. That means that your team did not know from the outset whether a particular technological goal was achievable. If you can show that your project goes beyond applying existing technologies and demonstrate that it breaks new ground, you can claim R&D tax relief.
Generally if a company has more than 500 staff it will be eligible to claim as part of the Large company scheme. This has recently been increased to 12% of spend but previous was 11% and before that 10% of eligble spend.
Generally the scheme is very positive and from the national statistics it is helpfing many smaller companies who would struggle otherwise to finance investment like this and larger companies get assistance to compete with companies in the USA and Germany for example which traditionally have been more innovate than UK ones.
If your business is undertaking any development activity then you might wish to consult your accountant or other professional advisor.
The scheme is underused with many companies even now unaware they can claim, also the companies making claims often don't claim what they could. HMRC is under pressure to approve claims as HM Government wants to be seen to promote innovation. Focussing more business time and effort into R&D is a worthwhile aim however as the UK has until recently lagged behind the more innovation orientated countries such as Germany and Japan. This scheme provides an opportunity to catch up.
Bio - Adrian is an accountant and experienced entrepreneur he regularly writes for this blog and for other publications including Alibaba
Popular Posts
Why Check Company Information
