Problem solving is part of everyday business and the costs in finding a solution may attract research and development (R&D) tax relief. So, taking the simple step to review whether the costs incurred by your business for research and development are eligible for tax relief, may be of considerable financial benefit.
The government has been offering generous tax reliefs for R&D expenses for several years now to encourage innovation, but many businesses are not taking advantage of this opportunity.
Small and medium companies can receive up to 230% of their expenses against their profits when calculating their liability, therefore when spending £100, the actual cost is only £54, due to tax relief of £46.
For small and medium companies that are not yet making profits, then there can be a physical repayment from the Revenue at 14.5% upfront on the uplifted expenses, meaning £100 spent costs only £66.65.
Large companies, in excess of 500 staff with turnover of €100m or assets of €86m, can receive a specific ‘Above The Line’ credit of 11% of qualifying spending to offset against their tax liability.
The relief is not just for scientists. Qualifying R&D expenses could be as simple as those expenses incurred in solving a problem that has created something new and innovative in the process.
Some examples of qualifying projects are:
- creating packaging to maintain the quality of product being supplied
- changing a manufacturing process to create an improved product.
By using our experience in this area, we can help you identify your innovation projects, and assess whether it is qualifying and assist with preparing a claim made to the Revenue in a format that minimises the likelihood of challenge. Contact us to find out more.