Tax Bite – Companies should not dismiss research and development tax claims so easily

We are seeing lots of companies who are throwing money away by not claiming research and development reliefs that they are entitled to.

This relief is very valuable because every £100 of qualifying expenditure benefits from a £225 tax deduction for small and medium sized businesses. Therefore (assuming a 20% corporation tax rate) every £100 of expenditure for which a claim is not made is like throwing £25 away. Furthermore after 2 years has passed from the end of an accounting period there is no way of making a claim.

As a broad rule of thumb if the company spends any money on resolving technological or scientific uncertainties they should at least be considering making a claim. Some examples of claims are as follows:

1. Aspects of design in vehicle manufacturing.
2. Testing the viability of materials in production.
3. Software consultancy firms creating new algorithms which are quite specialist.
4. Aspects of telephone mast design.
5. A bread manufacturer devising a new baking process for gluten-free bread.

The message is that just because a company does not have men walking around in lab coats does not mean that a claim is out of the question.

Please click here for our information leaflet on research and development tax relief.




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