If yes, HMRC could owe you money...
Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation. R&D tax relief is extremely valuable for companies undertaking research and development. They are a valuable source of cash for businesses to invest in accelerating their R&D, enabling the hiring of new staff and ultimately grow.
R&D is a Corporation Tax (CT) tax relief that may reduce your company's tax bill if your company is liable for CT or, in some circumstances, you may receive a refunded tax credit from the government.
To qualify you must be classed as an SME. HMRC require your company to have the following;
- employee headcount less than 500
- a turnover below €100m
- or balance sheet total less than €86m
You must also be carrying out research and development work in the field of science or technology. The relief is not just for scientific research but also for development work in design and engineering that involves overcoming difficult technological problems.
This can include creating new processes, products or services, making appreciable improvements to existing ones and even using science and technology to duplicate existing processes, products and services in a new way.
But pure product development does not qualify. Some examples of qualifying activities include software development, engineering design, new construction techniques, bio-energy, cleantech, agri-food and life and health sciences.
The most common question we are asked is what qualifies.
Below demonstrates how we have helped some of our clients:
Project: a circuit board requirement for the Ministry of Defence
Delivery: invented and developed circuit boards
Result: a decrease in CT of £92,526.00
Project: a new sales processing system
Delivery: development of an online sales processing system to support the sale of product
Result: a tax credit refund of £13,964.00
Project: Wi-Fi location technology
Delivery: to develop a Wi-Fi location & tracking technology
Result: a decrease in CT of £110,000.00
Project: a new locking system for fitness equipment
Delivery: developed a new locking system that improved an original piece of fitness equipment
Result: a reduction in CT of £45,378.00
Project: a new online booking system to enable clients, trainers and admins to all manage bookings easily without the need of passing paper forms
Delivery: creation of a bespoke system not available on the market – technological advancement
Result: a decrease in CT of £1,923.75
Project: bringing a new medical device to market
Delivery: development of a new product
Result: an R&D tax credit of £24,479.05
Project: to develop clinical processes and a service platform
Delivery: development of a new process
Result: a decrease of CT of £24,829.01
Project: to provide an automated ability to respond to competitor data by adjusting prices on online booking channels
Delivery: a new process/technological advancement
Result: an R&D Tax credit of £4,172.38
Do you think you have a project that could reduce your corporation tax or give you a tax credit refund?
We will help you understand whether you can claim for R & D Tax Credits.
Whether you're at the start of your journey looking to make your first claim or have been claiming for many years, we will guide you through the process. Or, we can manage the whole process for you.
Please get in touch here.