AI and R&D Tax Credits
Few technologies are developing at such a rapid – and exciting – rate as Artificial Intelligence (AI). From simple chatbots to automated processes and on-going machine learning, the potential for industries of all types to benefit from such innovative developments are significant. And, at a time when maximising ROI remains as critical as ever, embracing AI for your business could well help deliver greater returns through increased productivity, automation, and a reduction in staffing costs.
To capitalise on the growing technology, of course, means investing in the expertise of development professionals in order to identify and optimise solutions for your business. Whether you’re in construction or medicine, marine biology or aviation, it’s almost certain that AI will be able to positively impact your business. This also means that significant time and resources will need to be dedicated to research and development activities.
Benefits of R&D
Engaging in such R&D activity will not only help deliver intelligent solutions for your business needs, but also enables you to seek acknowledgement direct from the UK government for your investment in R&D work via tax credits. After all, spending the time and money on innovation doesn’t come cheap, but plays an integral part of maintaining the UK’s position at the forefront of modern industry.
Qualifying projects – and these can range from a number of AI initiatives such as programming source code through to the testing and installation of robotic manufacturing methodologies – will incur a number of costs. Most commonly, the bulk of R&D expenditure will go on personnel and staffing costs, with salaries, National Insurance contributions, and pension payments all constituting qualifying expenditure. There are also expenses relating to materials and utilities used throughout the R&D process that can be included in your claim.
Investment in growth
Submitting a claim will mean a reduction in Corporation Tax or even a cash injection in order to continue operating. And, depending on the size of your business, the value could prove significant in supporting the growth of your company.
For SME of fewer than 500 employees and turnover of less than €100m, there is the chance to deduct 130% of their qualifying costs from their yearly profit, in addition to the normal 100% deduction. Larger organisations, meanwhile, can take advantage of the R&D Expenditure Credit (RDEC), which offers a tax credit for 12% of your qualifying R&D expenditure. Regardless of the scale of your company, both schemes can provide an invaluable source of income for your business.
Find out more
It’s an exciting time for Artificial Intelligence, with some of the world’s biggest companies investing heavily in its development. If your business is looking to do the same – and wishes to benefit from R&D tax credits for software development – ensure you’re working with experienced R&D tax experts who can help process your claim successfully.
Get in touch with the Manchester-based team at R&D Tax Solutions to learn more about maximising your investment in AI today.