Does my business qualify for R&D credits?

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Millions of businesses are missing out on R&D tax credits, and yours could be one of them. Despite a wide eligibility criteria and valuable benefits, few business owners are aware of the availability of tax credits. As a result, they’re missing out on critical funding and reduced tax liabilities.

What are R&D tax credits?

Designed to encourage and reward innovation, research and development tax credits are available to business what carry out specific forms of R&D. Whilst there is, of course, qualifying criteria, the scope for claiming R&D tax credits is relatively wide.

If you’re eligible, you can either claim your tax credits in the form of a reduction in your corporation tax liability or as a cash payment.

With many companies continually searching for grants and financing, R&D tax credits can be an overlooked source of business funding. When you’re aiming for business growth, for example, research and development are going to be a critical element of the process. Whether you’re researching the money, investing in a new product prototype or enhancing your in-house processes, the costs associated with these activities could be the subject of research and development tax credits.

As an example of the funding available, you could claim R&D tax credits for the following costs:

  • The cost of consumables and materials used for research and development purposes
  • The cost of staff salaries, employer’s National Insurance contributions, reimbursable expenses, and pension contributions
  • The cost of subcontractors and freelancers for R&D activities
  • The cost of some technology, e.g. software

Who is eligible to claim R&D tax credits?

If you’re a limited company, you have carried out qualifying R&D activities and you’ve spent money on them, it’s highly likely you meet the criteria for R&D tax credits. However, the definition of ‘qualifying activities’ for the purpose of R&D tax credits has been left intentionally wide.

In its simplest form, you’ll need to spend money on creating new products, processes or services or modifying or changing an existing product, process or service to have your activity deemed qualifying.

Whilst many companies will carry out R&D activities in elation to their own processes, products and services, you can even claim R&D tax credits for qualifying research and development activities you’ve undertaken on behalf of a client.

Furthermore, R&D tax credits aren’t restricted to certain industries or types of businesses. Organisations across all sectors can claim R&D tax credits, so you needn’t worry that the nature of your business will prevent you from accessing this type of business funding.

Although there are two R&D tax credit schemes, these are simply designed to differentiate between small and large companies. The SME R&D Tax Credit Scheme is aimed at companies with fewer than 500 staff, less than £100 million turnover or with less than £86 in gross assets. For companies that exceed these limits, the Research and Development Expenditure Credit (RDEC) facilities R&D tax credit claims.

Are you eligible to claim R&D tax credits?

To find out if you’re missing out on business funding via R&D tax credits, contact Veritas Noble on 01327 317561 now!

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