We’d all like some free cash, wouldn’t we? Well it’s not quite ‘free’, but the vast majority of businesses in the UK are missing out on claiming what’s rightly due to them in the form of Research and Development (R&D) tax credits. These are a valuable government tax relief that rewards UK companies for investing in innovation. Introduced into UK tax legislation at the turn of the millennium, their aim has been to encourage businesses to increase investment in innovative activities. R&D tax reliefs offer significant benefits for companies advancing science and technology.
Do you qualify?
To qualify for one of the R&D reliefs, a project must meet the definitions set out by the Department for Business, Innovation and Skills. Broadly speaking, to qualify, a project needs to seek to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.
There is however, a common misconception, which leads to a lack of claimants, that the only companies that can benefit from relief are those that work in white lab coats in laboratories. In some cases of course, this is true, but in the majority of claim opportunities, this is far from the case. In fact, companies that can benefit fromthe relief are also those that invest in developing new products, processes or services; or even enhancing existing ones.
SME or large company?
The relief available depends on the size of your company and will factor in the wider group when looking at the limits that apply. An SME for example, will be a company with fewer than 500 staff and either less than €100 million turnover or €86 million gross assets. Whereas a large company will be one that doesn’t qualify as an SME.
Per HMRC statistics, an average claim made by an SME is £54,214 (2014/15) and £349,540 (2014/15) for a large company.
When preparing the R&D claim there are numerous costs that can qualify for relief. These include, but aren’t limited to:
• Expenditure on staff including salaries, bonuses, employer’s NIC and employer pension contributions.
• Expenditure on materials and consumable items including light, heat and power that are used up or transformed by the R&D process.
• Expenditure on subcontractors and externally provided workers.
• Expenditure on software.
Expenditure on capital items don’t attract R&D relief, however they may qualify for Research and Development Allowances (RDA) which the company can take a 100% deduction against profits on qualifying capital items.
So, what’s the true benefit in cash terms? Well, an SME can benefit up to 33p for every £1 of qualifying expenditure, in addition to the corporation tax relief already obtained on the qualifying costs. A large company can benefit by up to 8.8p for every £1 of qualifying expenditure, again, in addition to the corporation tax relief already obtained on the qualifying costs. And, the relief’s available to both profitable and loss-making companies.
Why Haines Watts?
Our experienced team have been supporting clients in successfully preparing and submitting R&D claims to HMRC across all sectors for a number of years now. Here’s some of the benefits of working with Haines Watts:
• 100% success – all of our claims submitted to HMRC have been approved.
• Dedicated R&D team – solely tasked with maximising claims for our clients by ensuring all allowable costs have been accounted for.
• Sector excellence – our team are experienced and can cover all sectors.
• Proactive – We work closely with clients to support them on future tracking of projects.
• No win, no fee – We work on a contingent fee basis, meaning there’s no cost to our clients unless the claim’s successful.
Chris Beale, Haines Watts Head of Corporation Tax and R&D for the South-East Midlands comments…:
“Our team has an enviable 100% track record working nationally to support clients in making successful R&D claims to HMRC. Unfortunately, the majority of businesses are unaware that their well-placed investment in advancing science and technology is worthy of, what in many cases, can be a substantial R&D claim”
So, whether you’re a well established pharmaceutical company, a local building firm, or manufacturer of ice cream, one of the best ways to find out if you can claim is to ask – With nothing to lose and everything to gain, our Haines Watts R&D team are waiting to hear from you. Click here to speak to one of our advisors.
For more information please visit the government link here.
Want to know more? Call us on 01604 746760 or email firstname.lastname@example.org