Research and Development Tax Credits are a cash incentive for UK businesses designed to encourage greater innovation. Each company that has qualifying spend can have its corporation tax burden reduced by a percentage of that spend (currently 100% or 125%). Companies that qualify as SMEs can get cash back even if there are currently loss making.
As it is a corporation tax credit it only applies to companies liable for that tax.
How much is available? There is no budget set. Any qualifying, allowable, spend can be used to apply to HMRC for the credit or cash. Even if the expenditure was incurred in the recent (last two financial years) past.
Takeup in the UK, one of the world’s most vibrantly innovative economies, is significantly below the European average. The provisional figures for the reporting year (to 31 August) have recently been published by HMRC and show that takeup is increasing, but not fast enough.
The highlights are…
- Total number of claims are up by 8.9% and now top 10,000 per year.
- Total value of credits allowed or repaid now exceeds £1 bn, up by 7%
So, are you getting your bit?
There are several benefits that accrue when you make a claim.
- You can get cash back into your company.
- The profile of R & D is raised throughout the company stimulating additional projects and improvements.
- More R & D will generate more, and more valuable, products and services.
- You can use the incentive in a sales situation to help your customers who are wanting to use your software and services in innovative ways and claim relief themselves.
- You can use the incentive when buying in innovative software, goods and services by encouraging your suppliers to claim and so achieve reduced prices and greater innovation in your suppliers.
Whichever way you look at it, if you are seeking to move your company forwards then look into claiming your bit of this free money – otherwise you are just leaving it on the table.
Now is the time to conact us for a free chat. There is a two year limit for claims, so call for our free R & D Tax Credit assessment service today.