Claiming tax relief on research and development has been a hot topic for a few years now, however the latest developments (or at least from what we have seen) seem to suggest that there is an increased realisation amongst business owners that R&D tax relief is not just limited to the techies.
In the past 11 months, we have successfully managed to claim around £750,000 back in relief for our clients (and some non-clients). Whilst this figure represents a growth that is reflective of the awareness surrounding R&D, what is more interesting about this growth is the type of companies who are successful in their claims.
Of course, the techie projects do make up a large portion of R&D claims, but we have also found businesses operating in industries such as retail and recycling are also having success with their claims.
All of this begs the question, what should business owners (regardless of their industry) be asking right now about R&D?
Here are our top 3 questions…
What actually qualifies as R&D?
Put simply, any project with the aim of advancing the science or technology in your chosen trade can fall within the scope of R&D.
This can be narrowed down to 3 categories – knowledge, product development and prototypes, all of which can occur in businesses of all shapes, sizes and industries. for example, We talk about this further in this recent infographic we put together.
What could R&D relief be worth to you?
This will naturally vary from business to business, but for every £100 of expenditure on qualifying R&D you are entitled to an additional relief of £130 on top of the £100 to reduce profits chargeable to corporation tax.
With regards to costs associated with R&D claims (or at least the way we process them), they are conducted similar to a no-win-no-fee basis so the only cost is just a small percentage of the successful claim. Win win.
Could you make more than one R&D claim?
We have seen this from both ends of the spectrum.
Some companies will have one large project which qualifies, whereas other companies may produce several smaller projects throughout the year (this can be particularly true for companies who provide bespoke solutions for their clients, for example) which make up multiple claims throughout the year.
There is often some degree of frequency to projects that could qualify (the business realises it or not), so R&D claims can be an annual occurrence.
A side note of this is that companies have until two years after the end of the relevant corporation tax accounting period in which to make a claim, so ‘R&D first timers’ can often be in for a treat.