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...]
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...]
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...]
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...]
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...]
Taxing Times for Small Business
This year will be the year in which many new taxes are implemented and a number of new consultations will start. Many of these are reasonably well known as announced well in advance of the implementation dates. However, it is now common that the autumn statements also have new tax initiatives which are due for implementation by April. The last autumn statement was typical in this regard. The following are some, but not all, new measures which affect mainly SME’s. Auto-enrolment: Most SME's are due to come on-stream with the pension auto enrolment in 2016. It’s a cost to the company but comes with social benefits. However, it’s admin intensive in the beginning and requires knowledgeable payroll staff. It includes part time staff under certain circumstances and includes domestic employers. One and two man companies can apply for exemptions to the PR by means of an email. Regretfully many SMEs are not aware or have chosen to ignore it, risking high penalties as a result. Company … [Read more...]
UK Companies Are Missing Out on Claiming R&D Tax Credits – Are You One of Them?
How to pay less tax in a few easy steps – it’s not rocket science but it does require some development activities! UK companies are missing out on claiming Research and Development (R&D) tax credits which means this great tax reduction scheme is under-utilised in the UK, compared to other European countries. If your company is using science or technology innovatively to create new or improved products, processes, systems or services, for yourselves or for your clients, you may well qualify. The average claim value for small and medium sized companies in 2011 was £43,000 and since then the rate at which a company can claim has been increased. “Literally thousands more companies qualify and they just don’t realise it.” Watch this video on three thing to look for to identify research and development for tax credit claims... http://youtu.be/GQfy82FiDaw The words research and development conjure up images of men in … [Read more...]
UK Compaines Are Missing Out on Claiming R&D Tax Credits – Are You One Of Them?
How to pay less tax in a few easy steps – it’s not rocket science but it does require some development activities! UK companies are missing out on claiming Research and Development (R&D) tax credits which means this great tax reduction scheme is under-utilised in the UK, compared to other European countries. If your company is using science or technology innovatively to create new or improved products, processes, systems or services, for yourselves or for your clients, you may well qualify. The average claim value for small and medium sized companies in 2011 was £43,000 and since then the rate at which a company can claim has been increased. “Literally thousands more companies qualify and they just don’t realise it.” Watch this video on three thing to look for to identify research and development for tax credit claims... http://youtu.be/GQfy82FiDaw The words research and development conjure up images of men in white coats in laboratories making scientific breakthroughs and … [Read more...]
Research and Development Tax UK Credits – Are You Claiming?
Research and Development Tax Credits in the UK has been uplifted each year for the past three years and are now at a record high level and are a great benefit to eligible Small and Medium Sized Enterprises (SME). The interesting fact is that many SMEs are not claiming when they could and should be. The R&D tax relief or credit is against corporation tax you have paid, or if you made a loss it is a cash credit at a reduced level. The current claim rate is at 125% of spend Currently the benefit is 125% of the value of your eligible spend on R&D. That means if you spend £100,000 on R&D in 2012 you can put an extra £125,000 against your corporation tax - saving you £25,000 in tax that you would otherwise have to spend! Usually the critical factor for a small business is understanding the scope of what can be claimed in terms of eligible projects and then writing a technical justification to support their claim for R&D Tax Credits. Misunderstandings... Some … [Read more...]
