R & D Tax Relief – could you be missing out on this opportunity?
What are R & D (Research & Development) Tax Credits
R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn
to greater investment in innovation. They work by either reducing a company’s liability to
corporation tax or by making a payment to the company.
If as a business you have no tax bill to reduce you can claim a cash payment.
Since 2001-01, when the scheme was launched, £21.4 billion in tax has been claimed. The amount of claims have steadily increased but in 2015-16 the claims increased by 22%.
Out of 39,960 claims so far for 2016-17, 3870 have been from businesses with a registered office in the East of England totalling £395 million claimed.
So should you be looking at R & D?
In many cases we’ve worked on, a business owner doesn’t believe that the R&D qualifying expenditure is eligible for R&D tax relief. This couldn’t be further from the truth. Think back over the past 2 years and ask yourself, have I…
- Looked for a more efficient or more effective solution.
- Made improvements to an existing product or created a new product.
- Investigated new methods or processes.
- Trialled new computer code or materials.
- Solved problems or overcame issues for customers. Sometimes it’s complicated working these figures out and we suggest that you seek professional advice if you think your business is eligible for R & D Tax Credits.
If the answer is yes, chances are you’re probably eligible for R&D tax relief.
The most common sectors who claim are Professional, Scientific & Technical and Information & Communication. That doesn’t mean that they are the only sectors where claims can be made. Industry sectors such as Manufacturing, Wholesale and Admin & Support and Construction are catching up.
Which Projects qualify for R & D Tax Credits?
For tax purposes, R&D takes place when a project seeks to achieve an advance in overall
knowledge or capability in a field of science or technology, but that doesn’t have to be the companies core business activity.
There are of course criteria that your business has to meet and your project to qualify. It can be time consuming working out what could be eligible but that’s where Haines Watts steps in to help.
Which Costs Qualify?
- Direct R&D staff costs
- Subcontractor costs
- Consumable items – electricity, gas, chemicals, materials for prototypes
- Software directly used
- Contributions to independent research
- Collaborative Working
All the above come with a set of criteria before they are eligible for a claim.
Over the past 5 years Haines Watts East Anglia have helped an East Anglian based IT company make a 200k tax saving, a Plant Hire company 142k, a Construction company 228k and a Technology company £1.4m and that’s just a few of the successful claims.
We work with business and HMRC on R & D Tax credits on a regular basis and know what is likely to be successful and which projects may not be relevant.
The Haines Watts website provides a selection of case studies for a variety of industries – read them here.
If you think your business could be eligible for R & D Tax Credits then please give us a call. Haines Watts will conduct a fact finding review and let you know if we think a claim will be successful.
Call us now on 01379 640555 or email us at firstname.lastname@example.org.
Our office is located on the Diss Business Park. Drop in and see us or give us a call on 01379 640555.