Your annual accounts are ready to be prepared but could you find ways to reduce your tax bill or get a cash payment to support your new product development? Well it might be that you can if you are undertaking development activities that qualify as Research and Development (R&D). It’s not just for rocket scientists or research laboratories. In fact far from it, all sorts of development activities qualify – a few are described below and we’ve also added a more comprehensive list at the end. The great thing about UK R&D tax incentives is that they apply to any UK registered limited company in any sector – The Dyson Report on Innovation 2010 made this point saying: “Of the various tax instruments available to government, R&D Tax Credits have the advantage that they seek to help companies that are themselves prepared to invest in R&D. Government does not need to choose sectors or companies, with the result that R&D can be encouraged in the widest … [Read more...]
Cash for creativity aka R&D tax credit – have you left money on the table?
If you have a moment to spare before the Autumn springs us back into work mode, use it to check whether you could claw back a slice of your corporation tax as R&D tax credit. And please before you say, “that’s not relevant to me”, read on as too many people take that view in error. R&D tax credit is not only for the techies or pharma companies and research labs of this world; it applies to a very wide range of business sectors. In fact no sector is automatically ruled out. Of course there are some sectors where companies are more likely to be undertaking qualifying development activities. A large share of the government’s R&D subsidy goes to companies in the manufacturing industries, such a food processors, drinks makers/brewers, precision engineers, electronic circuit board makers, chemical, plastic and packaging makers and companies that are developing new gadgets and widgets. It’s also quite common for agrarian, farming, construction and engineering … [Read more...]
Fundraising success stories for early stage companies
We looked at London based companies that have recently successfully raised seed funding! The good news is that there is a constant flow of funding into very young companies - albeit with a technology bias. Companies with innovative ideas, strong management teams and good business plans position themselves for better funding success. We wanted to get a flavour of what's happening in the world of funding for seed level companies that are based in London. We found five recent funding success stories - we have summarised what they got, what they do and how long they have been going. Labrador (internet of things) We’d all like to sure we are getting the cheapest energy bill on the market, but even with the help of price comparison sites it can be a chore working out which supplier to go with and then sorting all the paperwork to change supplier. Labrador aims to solve this problem by paring with your smart meter and analysing your energy consumption … [Read more...]
Women in Technology – Overcoming the gender imbalance
Why are there so few women in technology and will numbers of female founders in UK tech startup and scaleup businesses grow in 2018? I take a look at some of the data on women in technology and tech startups – it’s not all that encouraging but are things changing? Women still make up a woefully small percentage of business founders across tech industries and tech startups. According to a recent report published by Beauhurst the number of women founders or executives in scaleups across all industries is also tiny. They found that only 4% of UK ‘Visible scalesups’ had at least one female founder. (Source: The Scaleup Index 2017) There is some evidence that part of the problem is that it’s harder for women to attract seed and venture funding. This was highlighted by a PwC report published last year that revealed that women across the world are more successful at raising crowd funding. Why? - Because the playing field is more even. Here is just one statistic from … [Read more...]
New Low Cost Innovation Loans Announced up to £1m for UK Research and Development Projects
Innovation loans for research and development projects we first mooted some time ago. It’s good to see that they are now official having been announced at Innovate2017 annual conference, hosted by Innovate UK in Birmingham last month. The initial innovation fund is set at £50m to be allocated as loans under a pilot project over a two year period up to the end of 2019. It is for “small and medium enterprises (SMEs) involved in late-stage innovation projects”. “A late-stage R&D project is one which builds on a new idea but has not yet reached the point of commercialisation.” “It may include activities such as prototyping, demonstrating, piloting, testing and validation in environments that are representative of real-life operating conditions.” Loans will be made by Innovate UK Loans Ltd and will be given to successful applicants at a very low interest rate as compared to most commercial loans. The UK … [Read more...]
How do Research & Development Allowances (RDAs) help to buy buildings and equipment?
Research and Development Allowances can be claimed at 100% in year one, which means they provide a very generous cash releasing opportunity when you are purchasing fixed assets. Plus unlike the Annual Investment Allowance (AIA) they apply to buildings as well as other fixed assets you purchase. RDAs are claimed against ‘capital expenditure’ that supports R&D activities within your business. They should not to be confused with Research and Development (R&D) tax credits which are claimed against ‘revenue expenditure’ relating to qualifying R&D activities. Unlike R&D tax credits, which are restricted to limited companies, RDAs are not restricted to limited companies, they can be claimed by individuals and partnerships as well, so long as the claimants are ‘traders’ and not carrying on a ‘profession or vocation’. They are a first year allowance, providing a generous 100% tax offset in the year when the money was spent. This means that, … [Read more...]
Why Women Are Outperforming Men With Their Crowdfunding Campaigns?
A recent report by PwC, in collaboration with The Crowdfunding Center: Women unbound Unleashing female entrepreneurial potential - has revealed startling findings. Below I have summarised a few of the most fascinating findings and conclusions – you can download the full 24 page report by following the link below this article. Based on two years of seed crowdfunding data from nine of the biggest crowdfunding platforms globally – the report indicated that overall: Campaigns led by women were 32% more successful at reaching their funding target than those led by men across a wide range of sectors, geography and cultures. Seventeen percent of male-led campaigns reach their finance target, compared with 22% of female-led campaigns. $87 is the average pledge amount to female-led campaigns, 5% higher than male-led campaigns. Men were far more likely to run a campaign: in technology 9 male-led campaigns for every female-led campaign / in Digital Technology 3 male-led … [Read more...]
How do Grants and Research & Development Tax Credits Work Together?
It’s a popular myth that you cannot claim UK Government’s Research & Development (R&D) tax credits if you have received grant funding. This is not strictly true, the grant funding will change how much you can claim under the R&D schemes, but the receipt of grant funding does not rule you out from claiming R&D tax relief or credits. Many innovative and pioneering companies, especially those that are under five years old, have to secure a mix of funding from different sources in order to survive and grow. Both grant funding and R&D tax relief or credits are important sources of funding, along with equity/share investment and loans, so it’s important to get the facts straight. The key points to keep in mind are listed below. There are two R&D tax relief/credit schemes: RDEC (Research and Development Expenditure Credit) which is for large companies – that is companies or groups of companies with over 500 employees in the … [Read more...]
Horizon 2020 – A business funding opportunity for new technology or science development
Horizon 2020 runs from 2014 to 2020 and has a budget of around €80 billion of funding available over the seven years it will run. It’s about bringing more ideas to market. It has three key pillars: Excellent Science Industrial leadership Societal Challenges Here is just a small flavour of UK companies and projects that have been successful in securing Horizon 2020 funding: The London branch of Canadian company Tellspec will receive EU funding for developing a food scanner: an affordable and non-invasive mobile food sensor that enables users to measure and analyse their food intake in real-time. The European Commission awarded a total of €1,000,000 (£852.800) to three innovative companies at the CeBIT 2017 tech conference. UK-based researchers are top of the league in the European Research Council's (ERC) latest round of mid-career consolidator grants. Fifty-eight researchers working in UK institutions will each receive up to €2 million (£1.7m) of … [Read more...]
Now is the time to innovate – Call for UK to target 3% of GDP spent on Research & Development
As someone that meets a lot of people running innovative companies, which gives me some knowledge of the challenges they face – I was delighted to see that the Confederation of British Industry (CBI) has published a report which calls for UK Research & Development (R&D) spend to be raised to 3% of GDP. Like any report of this nature it’s not a short read, so here is a summary of it. You can follow the link at the bottom to download the full report. “Gene editing, space tourism, self-driving vehicles, robotic limbs, floating farms, London to Sydney in four hours. Game-changing innovations like these will shape the course of the next decade. Many will improve lives across the globe.” The report looks at: the case for more investment; why and how we need to build the UK’s capacity to commercialise Ideas; the challenges in our innovation ecosystem that need to be addressed; and the next steps for business and government. “…the House of … [Read more...]
Selling or Buying a Business – A Game of Snakes and Ladders?
The London Group March networking event takes a look at what's involved in selling or buying a business or raising some equity, with key insights from recent deals. Join us on Wednesday 29th March 2017- 6:30 pm Seats are limited – click to reserve one Program includes: Selling or Buying a Business with Special guest speakers: Peter Kroeger: Mergers and Acquisitions Partner at KLO Partners Mitesh Patel: CEO and Founder of Fifosys Ltd, an IT Managed Services Business and software developer for Engage Whether you want to sell your business tomorrow or one-day, or you are looking to buy a business as part of your growth strategy, or you have a client who wishes to sell their business or acquire a business, or raise equity funding - this will be a fascinating and illuminating event. You will pick up tips to help you figure out where the snakes and ladders are when you are involved in preparing for the sale of a business. … [Read more...]
My business is driven by technology – can I claim R&D Tax Credits?
Maybe you are creating apps or adapting existing software for cloud delivery (SaaS), or creating tools to make sense of big data, or using CNC machines to mill complex parts, or developing wearable tech or designing new medical devices …… the list is endless. Whatever your angle you will know that technology and what you can do with it, is constantly evolving. But what you may not know is that the skills and knowledge you are investing into technology could mean you can claim generous Government support. The questions to ask are: Do I design innovative products or processes? Do I employ technical staff or technical subcontractors? Is there some uncertainty in how to go about getting the outcomes I’m seeking? Do I spend staff time and money on my designs and developments? If you do, then you really should check your R&D tax credit eligibility. It’s quite easy to find out, quick to do and will cost you nothing. How do I … [Read more...]
The importance of integrating your systems for business success
It’s very easy to buy software today – gone are the times when you needed to go out and buy a disk and install something. Now you go online looking for a CRM system and, within minutes, you are using one on a free trial, and it works on your desktop, laptop, tablet, phone – anywhere you need it. This ease of access has a couple of effects: first, it’s easy to sign up for something without fully understanding the functionality on offer and, second, there are a lot of people after your monthly subscription, so there is a variable quality of product on offer. In short, it’s a bit of a minefield. Smaller businesses who are not willing or able to implement a modular enterprise system like SAP, Microsoft Dynamics, or one of the larger Sage products, for example, are potentially left with numerous different solutions. These may cover accounting, CRM, e-commerce, order-processing, inventory management, and other specialised business … [Read more...]
What does Brexit mean for the future of R&D Tax Credits?
The initial shock waves from Britain voting to leave the EU are subsiding, however the longer term impacts are yet to be felt. The big question for those UK companies claiming R&D tax relief and tax credits is - What does Brexit mean for our R&D claims? General opinion is that there will be no immediate impact. Over the longer term there could even be some positive outcomes, as the UK will no longer be bound by EU regulations that put restrictions on how R&D tax relief and tax credits are framed. The UK government, like many other countries around the world, uses tax incentives, such as the tax reductions and cash credits available under the R&D schemes, to make the UK more attractive for companies. They see the R&D tax credit schemes as critical to underpinning UK economic growth and competitiveness by supporting investment in innovation across all industries and sectors. Their belief in the schemes is evidenced by the many recent … [Read more...]
Dividends, salaries and pensions for company directors – could you save tax by acting now?
If you are a company owner/director you probably don’t need reminding that we live in a constantly changing world of pension and tax regulations. That said, how confident are you that you have acted to ensure you are managing your personal and business tax affairs efficiently in light of recent changes? Below we have listed a few things to consider when talking to your tax advisors. If you take dividends, you have just a few weeks to save future tax - don’t assume that because the new regime affects the year from 6th April 2016 there is nothing you can do now. Instead take the opportunity to both act now and plan ahead. Regardless of when your company year end is, if you have sufficient funds (after corporation tax liabilities have been considered), award yourself higher dividends before the 31st March and save dividend tax that will be payable next year. New tax on dividends – what does it mean for you as a company owner/director? At the moment … [Read more...]
R&D tax credits: Small Business Takes a Larger Slice
latest figures for R&D tax credit claims are out and the number of claims rose in 2013-14 compared with the previous year, with 20,100 claims made in total. This represents £1.75 billion of support and £14.3 billion of R&D expenditure. The total R&D expenditure on which claims were made increased by 7% in 2013-14. The number of claims from Small and Medium Enterprises (SMEs) rose in 2013-14 by 23% over the previous year. SMEs account for the increase in claims The increase in support in 2013-14 was mostly driven by a higher number of SME claims, with the total value of SME claims rising to an all-time high of £800m in corporation tax reductions and tax credit payments. One reason is thought to be the removal on 1st April 2012 of the rule limiting payable R&D tax credits to the amount of an SME’s total payroll/PAYE tax liability, as well as increases in the rate of the R&D enhancement for SMEs claims, which went up from … [Read more...]
Help with R&D Claims – Should You Use Your Accountant or a Specialist?
Word is out that many more companies are eligible to claim R&D tax relief and credits than are currently claiming, which means hundreds of companies are missing out on this valuable source of additional cash. The cash value of money left unclaimed in Government coffers is astounding, running into billions of pounds since the scheme started in 2000. In this article I look at some of the reasons why companies are not claiming or under-claiming and the pros and cons of using your accountant versus a specialist to compile your R&D claim. Under claiming is largely the result of lack of knowledge about what constitutes R&D, not only within UK companies but also within the accountancy profession. This should come as no surprise as while accountants are specialists in dealing with company accounts and regular tax affairs, they are often the first to admit that they don’t understand or see the science or technology behind their clients’ … [Read more...]
Help with R&D Claims – Should You Use Your Accountant or a Specialist?
Word is out that many more companies are eligible to claim R&D tax relief and credits than are currently claiming, which means hundreds of companies are missing out on this valuable source of additional cash. The cash value of money left unclaimed in Government coffers is astounding, running into billions of pounds since the scheme started in 2000. In this article I look at some of the reasons why companies are not claiming or under-claiming and the pros and cons of using your accountant versus a specialist to compile your R&D claim. Under claiming is largely the result of lack of knowledge about what constitutes R&D, not only within UK companies but also within the accountancy profession. This should come as no surprise as while accountants are specialists in dealing with company accounts and regular tax affairs, they are often the first to admit that they don’t understand or see the science or technology behind their clients’ businesses. Yet many small business owners … [Read more...]
RandD Tax Credits – Massive Boost for SMEs in UK Budget 2014
I was delighted to hear that the government has increased the rate of the Research and Development (R&D) Tax Credit for small and medium enterprises (SMEs) from 11% up to 14.5% for R&D costs incurred from next week (1st April 2014). The increase was announced in the UK Budget Statement 2014. This represents a very big increase, and means that up to 32.6% of what you spent on R&D can be claimed as a Tax Credit, which is a cash payment paid out in loss making situations. It now compares very favourably with the current 26% benefit (for spend after 1st April 2015) available when offsetting R&D enhancements against a profit. (The higher percentages are the result of applying an R&D enhancement value to the amount spent before calculating the rate of the tax relief or credit). It underlines the Government’s commitment to supporting businesses to invest in research and development and will help to ensure the UK is at the forefront of … [Read more...]
Do I Qualify? Research and Development Tax Credits?
Can you recognise qualifying R&D in your Company? you may be surprised how many companies can’t don’t be one of them! What are R&D Tax Credits? The Government’s R&D Tax Credit Scheme was introduced for Small and Medium Enterprises in April 2000 and for large companies one year later (SMEs for R&D purposes are companies with under 500 employees and either less than 100 million Euros turnover or a balance sheet value of less than 86 million Euros). The R&D Tax Credit scheme applies to Limited Companies: R&D costs can be offset against UK Corporation Tax. If there are no profits a Cash Credit is available... ...all subject to qualifying conditions being met. Since April 2012 qualifying R&D costs can be enhanced by an additional 125%, and since April 2015 130% which means that: if profitable you can reduce your corporation tax by 26% of your R&D costs – e.g. by £2,600 for every £10,000 spent or if you … [Read more...]
