Is your business eligible for R&D Tax Credits?

Is your business eligible for R&D Tax Credits?

There has been quite a lot of talk recently about R&D Tax Credits and it can be quite an overwhelming and complicated topic to do your own research on.

Let us explain…

Basically, if you can show HMRC that your business has spent money on qualifying R&D (research and development) costs, you can receive tax credits from them. This means you can get a reduction on the Corporation tax your business owes (if you are profitable), or they can pay you a cash tax credit (if you are a loss making company) and are not eligible to pay tax yet.

The idea behind this is to reward companies that are bringing new products & services to the market. And during the process of doing so, have taken some risks along the way.

You could qualify if you are:
– Advancing an existing system or product
– Able to show that you’re overcoming technical uncertainties
– Developing new products or systems
– Employing software developers, technical staff or scientific staff

So…how much can I get?

– For SME businesses that are profit-making, you receive up to 25% rate of relief. If you are loss-making, you can get up to 33% back in cash as a tax credit.

How do I move forward?

– Firstly, you will need to work with someone who is fully qualified to submit an R&D claim.
– You will then need to identify your qualifying R&D spend and prepare your narrative for HMRC. This is a document you will write that explains how you have satisfied the list of standard questions provided by HMRC.
– This is then submitted as part of your annual Corporation tax return.