If you are reading this article, you have probably heard of R&D credits. Congratulations. Whether or not you know what they are, or if you could benefit from them, you are already one step ahead of many companies across the UK.
R&D tax credits are incentives offered by the UK Government for businesses to invest in research and development.
If companies do so, and in turn contribute to the overall innovation of the country and technological advancement in itself, they are offered funding from the Government in the form of R&D Tax credits.
However, accessing these funds and ensuring that you business’s projects are eligible for the credits is no easy task, especially with so much else going on in your business on a daily basis.
If your business is innovating and you want to ensure that you and your employees are benefits from your hard work, using the taxation services of an expert accountant to analyse your eligibility and oversee your application could save you a significant amount of money in the form of tax relief.
Do I qualify for R&D?
If you are unsure if you qualify for R&D get in touch with 2one of our expert tax accountants today and we will advise you.
However, in general, the following guide should give you a pretty good indication of whether or not you are eligible for R&D credits.
In order to obtain tax relief via R&D credits, the research activities of your business must meet the following criteria:
The project in question must:
- Aim to advance the field of research itself NOT just your business. This doesn’t mean that successful research wouldn’t benefits you tremendously, it simply means that you must not be the only one to benefit.
- Demonstrate that there was uncertainty about the question you are trying to answer. Research focussing on a problem that has already been solved is unlikely to qualify.
- Show how it is that you have been able to tackle the scientific challenges in question using research and analysis.
- Show that the problem was not easily solved by experts in the field. This is often done by providing examples of attempts in the same research areas that have been unsuccessful.
What type of R&D might I qualify for?
There are different types of R&D schemes depending on the size of your business. Small and medium sized businesses can apply for relief via the SME R&D tax credits scheme whilst larger businesses can apply via the Research and Development Expenditure Credit (RDEC) scheme.
To qualify for the SME scheme, your business must have less than 500 staff and a turnover of no more than 100 million euros. You must also have a balance sheet showing assets of no more than 86 million euros.
Making a claim
R&D claims can be made going back up to 2 full accounting periods, but it is important to avoid the wrath of the HMRC by applying for relief for projects that do not qualify.
Consult with a professional to avoid doing just that.