There are numerous misconceptions around Research and Development tax credit scheme. Many companies are either unaware of the scheme or believe their businesses are ineligible for the scheme.
If your company is limited, it is an area that should be explored, and here are 8 reasons why….
1) 49,000 reasons! The average R&D benefit is a whopping £49,000.
2) The R&D scheme covers a variety of industry sectors. A common misconception is it applies only to companies that are pushing the boundaries of innovation or to laboratories filled with white coats. This couldn’t be further from the truth. In fact, if you are creating or developing a product, process or service across any industry then you could qualify! Improving an internal system? You could qualify.
3) Costs. Developing a new product, process or service? That can be expensive, especially when you add up the salaries, subcontractors, materials, utility bills and software licenses costs that might be incurred. Those costs are called your qualifying expenditures and are very important as they form the basis of the tax saving or benefits.
4) HMRC and Treasury fully support the scheme and want companies to utilise it. The Government believes that the UK will be more competitive and innovative in world markets if they encourage this scheme.
5) The programme enhances the returns! From April 2015, for each £100 of qualifying R&D expenditure, your company could have the income on which Corporation Tax is paid reduced by an additional £130 on top of the £100 spent. In real terms this means companies can claim back 26% of their qualifying expenditure.
6) Failed projects? These are even better examples of R&D versus those projects that achieved success.
7) Not paying corporation tax? Is your company in its infancy, yet to make a profit, or yet to pay corporation tax? Companies have the option of claiming cash versus carrying forward losses.
8) Cash from the HMRC. Yes! If you meet the criteria and are making a profit you could receive a refund of the corporation tax you have already paid or offset the R&D relief against future taxes owed.
We encourage all businesses to speak to our R&D experts to see if their business might qualify.
Please visit Morgan Reach – Tax Credits for more information.