Does your company qualify?
If you are a business that creates innovative products or processes, you could qualify for Research & Development tax relief.
Many people have heard the term but don’t really understand what this is and more importantly whether what they are doing would come within the regime and be eligible. R&D tax relief is designed to assist innovative companies who develop new software and products etc by either reducing their corporation tax bill or providing a repayable tax credit for companies who are not yet making profit.
The relief was first introduced in April 2000 for small and medium sized companies (SME’s) and was extended to large companies in April 2002.
What are the benefits of R&D tax credits?
R&D Tax Credits work by allowing your business to include an additional deduction in calculating its taxable profits. Real tax savings can be achieved whether your company is tax-paying or loss making.
The SME scheme has a rate of R&D expenditure tax relief as high as 230%, while the Large Company Scheme has a rate of 130% – meaning you can save a fair amount on your tax bill.
Over the last few years it has become apparent to us that there is a widespread misunderstanding about what qualifies for relief. In our experience, clients think that they need a laboratory, test tubes and staff in white coats to be able to make a claim! In the first instance, clients should be asking themselves whether they produce anything innovative and unique.