New Tax Incentives
In 2000, the Government brought in a new tax incentive scheme for businesses called the Research and Development (R&D) Tax Claims scheme. Designed to help the UK compete in the world of Science and Technology, the scheme aims to reward businesses for innovation in this area.
Encouraging businesses to participate, it’s a generous scheme, which unfortunately thousands of companies are not using. When claiming, much emphasis is often put on the labour and material costs involved, but relief for capital expenditure is an area not to be overlooked.
R&D Tax Incentives
It’s thought that 90% of qualifying companies are missing out on the R&D tax incentives available to them. This if often due to being unaware of the scheme, not realising they qualify or even being put off by HMRC’s complicated claims process.
Qualifying
To qualify, you must meet certain criteria. This includes:
- Conducting an R&D project that has some uncertainty about the results and seeks to extend knowledge and capabilities not currently achieved in the field. The outcome should’ve created a new or improved process, product or service within the realm or science and technology and be related to the field you’re either in or moving into.
- Being liable for Corporation tax, even if not profitable.
- Adhering to the correct criteria based on your size. Large organisations will have a different scheme than SMEs, for example.
- You must be claiming within TWO years of money being spent on the project.
R&D Capital Expenditure Claims
Once eligible, filling out the R&D tax claim form has several steps including proving your project qualifies and working out what you spent. Businesses often focus on expenditure such as the labour costs, materials used, staff wages and the software expenses.
However, there are also tax incentives available for the capital expenditure involved, although this can be a complex area in official guidelines. Whilst the legislation has very strict guidelines on which capital expenditure qualifies, any R&D capital allowances (RDAs) which do, can receive a 100% first year allowance. This would only include expenditure for R&D related activities such as:
- capital equipment purchases
- building
- extensions
- renovations
- property purchases
However, each case is different and claims depend on factors such as the interaction between all your capital allowances, the types of expenditure made, proportions of the expenditure that were specifically for R&D activities and how much you’ve spent. Seeking professional advice from an expert will enable you to fully maximise your claim and make it clear what you’re eligible for.
R&D Tax Claims for Businesses
To ensure you qualify and are claiming for every aspect of your research and development projects, speak to R&D Tax Solutions. Our Manchester-based team know the legislation inside out and specialise in R&D tax claims for businesses. As R&D tax claims consultants, we’ll take you through the entire claims process from eligibility to claiming what we think you qualify for. By using a specialist, you’ll ensure every aspect is covered, and you have the best chance of success.
Get in touch with our team today by either calling us on 0161 298 1010 or by emailing office@rndtax.co.uk.
