Why Every Start-up Should Understand R&D Tax Credits

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Starting a business is not easy. Taking the plunge to set out on your own takes courage, commitment, and a reasonable amount of self-confidence.

It’s also a financial risk and carries with it a chance of failure so anything that helps a start-up survive those early years has got to be welcome. And for those that are developing innovative ideas, claiming R&D tax credits could be a lifesaver.

A financial boost from R&D tax credits

There are many reasons why a start-up may fail, but especially for innovative companies there can be a long period of product or service development before the company sees any revenue.

And this pre-revenue period can often turn out to be a lot longer than expected if the development proves to be more difficult than anticipated. In these circumstances, any financial help a company can get can be a lifeline.

The qualifying criteria for making an R&D tax credit claim can be hard to decipher but never assume that the work you are doing doesn’t qualify for relief. Always ask an expert – they may be able to identify some part of what you are doing that can attract help.

Crucially, the work does not have to have been successful to qualify.

What costs can be re-claimed?

What does the relief cover? The costs you can claim for include salaries, national insurance and pension contributions of staff directly involved in the R&D or indirectly supporting it, including supervisors and managers.  You can also include agency staff and subcontractors.

It also includes materials used on unsuccessful prototypes, a proportion of your utility bills and software purchased.

How much is it worth to my business?

Most start-ups would come under the SME scheme, which allows you to deduct 130% of your qualifying costs from your annual profits, on top of the normal 100% to make a total of 230%.

If the company is loss making it can claim 14.5% of the loss as a tax credit.  This equates to up to 33p for every £1 spent on R&D as a cash payment from HMRC.

No start-up doing R&D work that might qualify can afford to ignore that sort of assistance.

What should I do to investigate the relief?

Our advice to you would be to seek advice from one of our specialists to see if you are eligible, and we can tailor a package that suits you and your company.

LimestoneGrey are Chartered Tax Advisers that specialise exclusively in R&D tax credits, therefore we have a thorough understanding of the tax legislation and HMRC practice, as a result, we are able to offer a service which helps to:

  • Ease complexity
  • Minimise your time and effort
  • Minimise HMRC risk
  • Maximise claim acceptance

We offer free consultations so there is no risk in exploring the possibility of submitting an R&D tax credit claim. Call us today on 0330 223 4 223 or email [email protected].

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LimestoneGrey is not your average tax consultancy. As the only firm of Chartered Tax Advisers dedicated to R&D tax credits in Wales, we pride ourselves on our refreshingly unique approach to Research and Development (R&D) tax credits which makes the claim process simple and straightforward.

We specialise exclusively in R&D tax credits – this level of specialism provides us with a more thorough understanding of the tax legislation, HMRC practice and how it could impact your business. Based in South Wales, we are passionate about helping Welsh companies from all sectors successfully claim what they are entitled to, which often equates to tens of thousands of pounds or more.

We appreciate that the claim process can be a little overwhelming. There is so much information available that it is hard to know where to begin. Our Chartered Tax Advisers provide a complete R&D service ensuring your claim is fully optimised, providing you with peace of mind and confidence, whatever your industry, size or structure.

More companies qualify for the relief than you may first think. You do not need to be undertaking cutting edge research to make a claim – this is the biggest misconception surrounding R&D tax credits. You simply need to demonstrate that your company has undertaken work which was not routine or easy to achieve. Our experienced advisers can help pull all the necessary information together and present it in the correct way.

All this can be done risk free – if you do not receive a benefit then LimestoneGrey won’t charge you anything! Contact us to speak to one of our specialist Chartered Tax Advisers

 

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