R&D Tax Credits cover a broad range of projects
HMRC define R&D for the purposes of Tax Credits as research related to your company’s trade which seeks to overcome uncertainty. That is to say, the answer to the problem you’re trying to solve can’t be readily discernible to ‘a competent professional working in the field.’ Success is not a criteria for eligibility – you can claim for a project even if it ultimately fails.
R&D Tax Credits cover a multitude of projects, both high-tech and low-tech. For example:
- Designing a new IT system
- Creating a new app to drive online business
- Devising a new, more scalable way to manufacture your product
- Building a prototype – even if it fails!
We need to dispel the “white coats” myth and encourage other types of businesses to apply. You can claim for all sorts of costs relating to the project: raw materials, electricity, staff wages. With the average payout currently standing at £50,000, you have a lot to gain and very little to lose.
How much can you claim?
R&D Tax Credits are one of the most generous tax credits currently available to small businesses. The government is eager to encourage innovation in order to keep the UK at the forefront of technological advancement, and it is willing to reward companies working on innovative projects. The scheme can be highly lucrative. According to HMRC’s guidelines, an SME (defined as a company with less than 500 staff and a turnover of less than £100 million) can claim back up to 230% of its qualifying costs. This means that for every £1 spent on R&D, a small company could reduce its annual tax bill by up to £2.30. Larger companies can only claim back 11% of their R&D expenditure but, as the numbers involved tend to be much bigger, this can still be a sizeable amount.
With so much money at stake, it’s surprising that so few companies take advantage of the scheme. The Telegraph recently reported that around 40% of UK small businesses generate innovation of some kind, but the vast majority don’t think to claim tax relief. A lot of this is due to misconceptions about the sort of businesses that can apply. Many people still think that R&D Tax Credits are only for high tech companies conducting cutting edge scientific research. While these companies are certainly eligible, R&D Tax Credits cover a wealth of other activities. They can help you, whatever you do.
Your next step
If you decide to apply for R&D Tax Credits, you’ll need to make your application as convincing as possible. You need to present a robust case to HMRC backed up with detailed evidence. The process can be stressful and time-consuming, especially if you’re running a small company with limited resources. That’s where we come in. We have years of experience with R&D Tax Credits and can guide you through the process. We can even advance you 50% of the value of your claim within 48 hours so you can get back to work as quickly as possible.
Innovation doesn’t just take place in laboratories. Get in touch today and let’s get to work.