R&D Tax credits is a great government funding scheme – one of the most reliable that the UK government puts out. If your business does anything that sounds like it might be R&D (i.e., involves resolving “technical uncertainties” by developing new tech stuff, software, hardware, biotech or otherwise), then you should definitely look into this and collect your R&D tax credits.
The exact calculations can get very complicated, but here’s a simple thumb rule: as an SME, you can recover about 15-30% of what you’ve spent on R&D. If most of the spend was on subcontractors, it’ll be closer to 15%. If most of it was on directly employed staff, it will be closer to 30%. Your exact profit or loss figure, and other factors, will also impact the amount, but as a thumb rule, 15-30% of your developers/researchers’ salaries is what you’ll be able to get back.
If you’re a large company, it’s even simpler, but less lucrative. You’ll be able to get back about 9% of your costs.
So how do I get it?
The R&D Tax Credit filing is via something called a CT600 – a Corporation Tax Return. You need to calculate the exact figures to fill in the right boxes, and also to write a clear “technical narrative” that explains why your project qualified, and produce a calculations table that shows how you worked out the figures. Bear in mind also that HMRC may query the figures or the narrative, so you should make sure you read up on the regulations on HMRC’s site, or, even better, on our resource at https://granttree.wpengine.com/tax_credits.
Or, just spend one to two hours with us and we’ll do all the work for you, no hassle!
What’s the catch?
Strangely enough, there isn’t one. The UK government has put this scheme in place (which was already successfully applied in Canada for a solid decade) because it recognises that most growth comes from innovative companies, and most innovative companies become so by doing R&D, and so it wants to further incentivise companies to invest more in R&D.
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