The most recent government numbers confirmed that 23% more SME’s had claimed R&D Tax Credits in 2013-14 compared with the previous year. This is still a tiny proportion (less than 2%) of the number of companies who are likely to be eligible and could therefore claim. It’s clearly quite surprising and flies in the face of the popular preconception that, if they had a way to, almost everyone would like to pay less tax!
R&D Tax Credits have been around in the UK for more than 15 years. It’s an enhanced Corporation Tax relief and has been used by successive governments as a way of encouraging limited companies to invest more in innovative development work. The average corporation tax saving or rebate that can be claimed is now c.£50,000 and there’s no minimum level for making a claim.
The four key rules that determine eligibility are that claimants:
- Must be taking the risk / standing the cost (of the R&D)
- Must be using science and/or technology
- Must be seeking an advance or improvement in a product, process, service or system (which can’t be trivial)
- Must be dealing with and seeking to overcome problems and uncertainties
Claiming is straightforward and the companies that could benefit come from a very wide range of sectors. The important initial task is to clarify the scope of the R&D that’s been undertaken, confirm eligibility to claim, and then pull together the claim in an appropriate and acceptable way (including summarising claimable costs and providing a report that justifies the claim from a technical perspective).
We can help
If you think that you may be paying too much tax we may be able to help. Feel free to give us a call on 0208 238 8730 or let us know here. We’d be happy to discuss and to put you in touch with an expert to chat about whether you’re eligible to claim R&D Tax Credits.