What are R & D Tax Credits?
R&D tax credits were first introduced in 2000, so this is not a new form of tax relief, but in recent years the rates have increased significantly, to further incentivise companies to claim.
The R&D tax relief and R&D tax credit schemes are recognised as the single biggest funding mechanisms for UK businesses.
R & D Relief is a Corporation Tax (CT) relief, it is available to corporate bodies that would be eligible to pay corporation tax. This does not mean the company has to be taxpaying to receive the relief.
Small or medium-sized companies that are not paying corporation tax, may be able to choose to receive a tax credit instead, by way of a cash sum paid by HMRC.
Large companies can now claim an Above the Line Credit, of 10% of the qualifying R&D expenditure, whether they are paying corporation tax or not. This benefit is taxed.
Who can apply?
R&D Tax Credits still going strong...
The Chancellor’s Autumn Statement, delivered in the House of Commons on Wednesday 25th November, made no changes at all with regard to R&D Tax Credits.
This potentially very lucrative and worthwhile relief is still available to both SME’s and indeed larger companies, but surprisingly less than 2% of the SME’s who could potentially claim do in fact do so.
To find out if your company is eligible to claim R&D Tax Credits please Contact us.
The two key criteria in determining who is eligible for R&D tax credits are 'Scientific or Technological Advancement' and ' Over coming Scientific or Technological Uncertainty'.
You may have a viable R&D claim if you can answer ‘Yes’ to any of these questions:
- Do you employ any staff with a technical or scientific background?
- Do you develop prototypes or samples?
- Do you undertake or outsource any testing activities?
- Have you aborted development due to overwhelming technical challenges or failures?
- Do you have development that seeks to enhance any of these areas: performance, accuracy, scalability, security, throughput, quality, durability, integration?
- Do you have difficulties developing legacy systems or components to operate in newer environments or with different requirements?
- Are you further developing ‘off-the-shelf’ solutions to meet your own requirements?
Many business owners and finance departments will wonder ‘are we eligible for R&D tax credits?’ The answer is often yes. If your company is taking a risk by innovating, improving or developing a process, product or service, then it can qualify for R&D tax credits.
If you are still doubtful that you can make a claim, here are some frequent comments and responses that may resonate with you…
“There isn’t any qualifying R&D in this field”
Is that because you haven’t looked at the technical problems the staff solve or try to solve every day. How many technical staff do you have? What are they doing?
If you have one or more and they are developing solutions, or solving problems that activity is highly likely to qualify.
“This isn’t R&D, I do it every day.”
Could anyone do what you or your team does every day without any training or experience? If the answer is no, there could be an R&D tax relief claim that could help to fund the business.
“We can’t claim this as the project got cancelled.”
If a project is aborted due to overwhelming technological challenges – this is ironically one of the best examples of R&D for tax purposes!
How Tiffin Green can help…
We work alongside a highly skilled multi-disciplinary team of R&D Tax Credit specialists. They will assess your situation to determine eligibility and assist with submitting a valid and fully-optimised R&D claim. This is a no win/no fee service. Fees are based on a percentage of your approved claim.
Please contact us for an R&D Tax Credit Assessment.