Sorry to harp on but don’t miss out on R & D!

We often sing the praises of Research and Development (R&D) tax credits but not many people seem to be listening!

Stats show that generally less than 0.5% of companies are making tax claims for Research and Development costs. Many companies are not taking advantage of this very generous relief – if you are entitled to the tax credit (or your clients are), make sure you are not one of the ones who miss out.

It is easy to think that R & D credits can only be claimed by companies involved in the scientific and technical industries. This is far from the truth; any company can claim R & D tax credits so long as they incur costs associated with using new technology to improve a process.

The rules

The rules may seem complex, but the benefit of the tax credit is significant. Your company is not only entitled to relief on its R & D expenses, but HMRC will also give your company a 130% bonus.

There is no rule set in stone for what constitutes R & D, and nor do you need to be inventing something new. For example, if you manufacture machine parts and then develop a new process to make them, the money you spend for this will count as an R & D cost.

To gain the relief, you must:

  • Spend at least £10,000 in one accounting year on R & D.
  • Make the R & D claim within 2 years from the end of the accounting period in which the company made the R & D costs.

Advice

  • Look at this soon because accounting periods drop out every 2 years.
  • The cost of employee’s time, including your own, counts as an expense for R & D relief. Total the salary, NIC, staff welfare and other associated costs for the time employees spent on the R & D project.
  • Report this in a user-friendly way to HMRC. Our experience is that they are generally quite keen to allow these claims.

 

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