Despite R&D tax credits being around since 2000 and continually being made more and more generous by each successive government, it is surprising to learn that only 20% of eligible businesses are claiming.
R&D tax credits can provide qualifying companies with very generous cash repayments. This is illustrated by the fact that the average value of a small and medium size company (SME) claim stands at circa. £54,000, per the latest set of Government statistics. The figure is circa. £273,000 for a large company.
Detailed below are some of the key misconceptions around R&D tax credits that LimestoneGrey found.
Tax credits are for revolutionary breakthroughs
The biggest misconception about research and development tax credits is that you need to be in bright white lab coats undertaking cutting edge research to make a claim. R&D tax credits are a valuable government tax incentive created to reward companies who try to achieve something technically challenging.
Tax relief from R&D is not just reserved for pharmaceutical companies and scientists in laboratories. In fact, many R&D claims come from sectors such as manufacturing; engineering; food and drink; IT; energy, etc. As long as your company is seeking an advancement in your industry, where you have faced challenged and uncertainties then there is a strong possibility of a successful claim.
Tax credits are only available for large, profitable companies
R&D tax credits are intended for businesses of all shapes and sizes. You simply need to demonstrate that your company has taking a risk by showing that you were faced with challenges that required additional efforts to overcome.
This could range from creating a new product or process, to making improvements to existing software and services. You can even claim R&D tax credits if you are trying to reproduce a competitor’s breakthrough.
Claiming R&D tax credits is a difficult, long-winded process
Much has been done to make claiming R&D tax credits a more accessible and timely process. Credits are released at the end of the financial year, and you can make a claim for R&D relief up to 2 years after the end of the accounting period it relates to.
LimestoneGrey are Specialist Chartered Tax Advisors. We specialise solely in the niche area of R&D Tax Credits and have a deep understanding and a wealth of experience in securing R&D tax relief for our clients. we work hard to inform Welsh businesses of their entitlements. So, if you want to discuss R&D Tax matters, call us today.
