Research and development - a key element to many businesses, and something that you can use to help alleviate your tax bill for your company. But what are the solutions, and how can you qualify to make an R&D claim? Our team member, Rinata, explained that “to put it simply, it is an incentive from the UK government that encourages companies to develop new technologies and bring about innovations that speed up, simplify, modify, or improve existing processes in technology and science.
Companies can either claim a tax credit or a reduce taxable income for tax purposes. It does not reduce their income for accounts and reporting purposes, only to reduce tax liability.In order to make a claim the company has to prove that their activities resulted in an advance in science or technology. There are certain types of expenditure that are considered qualified, these are not limited to development costs only, such things as planning activities, training, etc can be claimed too, and salaries for admin, clerical, finance staff can be apportioned too, and included in the claim.”This is an excellent solution for many companies, as those of us who are working to help improve our processes within our business, can use this relief to help us invest the appropriate sums into training and technology that can help the team as a whole become more productive.
You can even claim if a project is unsuccessful, as you would have still invested time and money into a project that could be within the remit of the requirements. Another excellent part to this relief is that the project you are requesting the claim on can not only be to do with research and development into a new process, product or service, but to improve an existing one. The project must, however, relate to your company’s trade - either an existing one or one that you intend to start thanks to the result of the research and development you have done.To get R&D relief you need to explain how a project:
If you are working on a project, that requires in-depth research and development to help improve your companies processes, within technology and science, then you may be able to submit a claim for a relief, and the type of R&D relief you will receive depends on the size of your company, and whether you required the help of subcontractors.
This means that you can claim this type of relief if you have:
You may also need to include linked companies and partnerships, to ensure you do qualify as an SME. The allowance for SMEs who qualify gives you the ability to:
For larger companies, you can claim the RDEC for working on R&D projects. This can also be claimed by SMEs, as well as large companies, who have been subcontracted to do R&D work for a large organisation. This tax credit was for 11% of your qualifying R&D expenditure up to 31st December 2017, and raised to 12% from January 2018. As you can see, the government is by your side, wanting to enable companies who are truly looking into how to accelerate and change the ways in which their industry’s are working, through innovation and new technologies with this credit, so if you feel you may qualify, do take a look into how you can claim it. This blog is for educational purposes, and shares information we believe to be useful to you (without overwhelming you), please do seek specialist help if you are looking into claiming R&D tax relief.
