Research & Development Tax Credits

The majority of business owners entitled to claim R&D tax credits are totally unaware that they can make a claim, In fact, a significant number of general accountants who do not specialise in the subject are also unaware of who is entitled and how to make a claim. There is a myth that R&D tax credits are only for bio chemists or rocket scientists. However, the accountants for the research industry on our panel who have specialist knowledge can confirm that this is certainly not the case.

In reality, most industries and business sectors are able to claim tax credits. Accountants for R&D with an in depth knowledge of the process will be able to inform you of your entitlement and assist in applying for the tax credit.

How do R&D tax credits work?

In simple terms R&D tax credits enable companies that incur costs in developing new products, processes or services to receive a cash payment or to reduce their corporation tax payments. In 2015 the average claim for an SME over a given year is in excess of £40,000. Whether you have a profitable or loss making business the R&D tax credit is a viable way to reduce your tax bill and or realise a cash bonus.

R&D tax credits are viewed as a viable funding option for many businesses – as up to a third of the businesses R&D spend could be made available as a cash repayment. This is a very generous HMRC incentive that only a small percentage of eligible businesses are currently taking advantage of.

To qualify the company needs to be UK based and the spend needs to be directly identifiable as being related to R&D, again something your accountant can assist with. The Government is encouraging claims from businesses operating in the UK as it is striving to make the UK the most attractive place to start and invest in innovative companies.

A simple test to see whether your company qualifies for R&D tax credits is:

Do you spend money on improving or developing a new or current process, (costs could be related to staffing costs, heating, lighting, power or materials)? The answer is most probably yes and you are then most likely able to work with our specialist accountants for R&D companies in order to reclaim a significant proportion of these costs against your corporation tax due.

For more information and to discuss accounting for research industry with one of our experts please Contact Us today.

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