What Are R&D Tax Credits?
Businesses in the UK can benefit from significant tax breaks when they apply for R&D tax credits. Businesses eligible for R&D tax credits must show how they are investing in innovation and developing new products or processes. If your business meets the eligibility criteria, it’s definitely worth applying for the scheme today! This blog post will discuss five reasons why you should apply for an R&D tax credit claim.
1) Get a Tax Break for Your Innovation
The R&D tax credit scheme is designed to incentivise businesses to invest in innovation and development. If your business meets the eligibility criteria, you can claim back up to 33% of your investment in R&D as a tax break. This can be a significant saving, so it’s definitely worth applying for the scheme if you invest in innovation. Both large companies can claim and small through the SME scheme.
Here is how you know your business meets the eligibility criteria:
-Your business is carrying out qualifying activities, which are activities that meet the definition of R&D.
-The costs of these activities are eligible for relief.
-The amount of relief you can claim is based on your company’s taxable profits.
-Your company must be a UK resident and trading.
The R&D tax credit scheme is open to businesses of all sizes, so you can benefit from the scheme no matter how big or small your company is. However, if you are unsure whether your business meets the eligibility criteria, speak to an accountant or tax specialist who can help you determine whether you are eligible for relief.
2) Get a Tax Break for Your Expenses
You can claim back a tax break for your investment in R&D, and you can also claim back a tax break for your associated expenses. This includes costs such as employee wages, materials and software. So, if you are spending money on R&D activities, make sure to include these costs in your application.
3) Get a Tax Break for Your Time
In addition to claiming back tax breaks for your expenses and investment, you can also claim back tax breaks for your time on R&D activities. This includes time spent on research, development and design. So, if you have dedicated any of your time to R&D activities, make sure to include this in your application.
4) Get a Tax Break for Your Risk
When you apply for R&D tax credits, you don’t need to worry about whether your activities are classified as ‘R&D’. The scheme is designed to be flexible so that you can claim back tax breaks for any innovative activity. This includes activities that are high risk but have the potential to result in significant savings or profits.
5) Get a Tax Break for Your Future
Research and development (R&D) can be a huge benefit to help fund future R&D projects. If you qualify for R&D tax credits, it’s likely your business is leading the way for innovation in your sector. This means your R&D spending can be covered and you can continue to show qualifying R&D expenditure, whether that be overcoming scientific or technological uncertainty, or creating incredible new equipment.
In conclusion, the R&D tax credit scheme offers businesses significant tax breaks for investing in innovation. If your business meets the eligibility criteria, it’s definitely worth applying for the research and development expenditure credit (RDEC) scheme today. You could see a large tax cut or cash payment land for your business!
