Does your SME Qualify for R&D Tax Credits
Research and development tax credits give small and medium enterprises the opportunity to take advantage of tax benefits when engaged in R&D activities as part of their business operations. If your business meets the requirements, you could be in a position to enjoy great advantages from the scheme, which was introduced by HMRC in April 2000.
SME and R&D tax relief
Regardless of the industry in which you work, your business must meet the following criteria in order to make a claim under the SME scheme.
- Employ less than 500 employees
- Have an annual turnover no greater than €100 million
- Be a limited company in the UK
Fulfilment of this criteria means your business could claim R&D tax relief worth up to 230% of qualifying costs. This basically means that, for every £100 you spend on R&D, you are able to lower the profits you’re paying corporation tax on by £230.
The purpose of R&D tax credits for SMEs
Tax credits for SMEs have been designed to encourage UK businesses to invest resources into research and development, enabling those companies working to develop innovative solutions to claim credits for a number of expenses – a figure as high as 26% on qualifying expenditure. What’s more, even loss-making businesses have the opportunity to reclaim applicable costs (of up to 33.35% of qualifying expenditure), making the scheme a worthwhile enterprise for all businesses to investigate.
R&D tax credits can be claimed on revenue expenditure but not on capital expenditure. As such, those expenses which can be claimed include:
- Employee costs related to those involved directly or indirectly with the R&D.
- Subcontractors working on R&D projects can be claimed at 65% of their invoice total.
- Consumable or transformable (i.e. physical) materials used directly in the R&D process can be claimed.
- You can apportion necessary power, water, and fuel costs associated with the R&D activity in your claim.
It is advisable that you consult with R&D tax credit specialists in advance of making a claim, as this expertise could make the difference between successful and unsuccessful claims. You can even use our online R&D tax credit calculator to determine exactly how much you may be able to secure in tax credits.
Find out more
At R&D Tax Solutions in Manchester, our team of tax experts have helped thousands of UK businesses claim tax credits – and benefit from tax relief – successfully. We work alongside our clients every step of the way to ensure that the complexities of any claims are negotiated effectively, thereby ensuring the best-possible chance of a successful claim.
To find out how we can support you in claiming the tax credits your business deserves, simply contact us today on 0161 298 1010. Our knowledgeable team will be able to answer any questions you may have and will be happy to provide impartial, comprehensive advice.