Research & Development Tax Credits : Free Cash from the Government

Over the last few months we’ve got our clients £000’s through research and development tax credits. There has been much talk in the media about cutting tax credits over the last week. To be clear, none of these changes affects R & D tax credits. They remain very keen to promote technical innovation. We can help show how your project might be acceptable as R & D.

So what are R & D tax credits?

If you spend money developing new products or services you may qualify. The idea is that the research you do takes our knowledge and understanding forward, the key words that you need to think about relating to your project are ‘innovation’ and ‘uncertainly’.

If you think your project counts the key question is how much money can you claim? Normally in small and medium sized businesses this is a bit messy, because there’s unlikely to be a separate R & D department! The costs will be mixed up within the general costs of the business. What we’ve been able to do is unravel them to enable our clients to make a sensible R & D claim.

What Can I Claim?

You have a choice, if you are profitable you can get an extra deduction against your tax bill, if you are not profitable you can get money from the taxman. The extra deduction against your corporation tax bill takes the allowable costs from 100% of the cost to 230% of the cost, so for every £1,000 of cost, £2,300 is written off your taxable profits. If loss making you can get back 33.35% of the money you have spent on R & D.

When can I claim?

As soon as possible, but within 2 years of the relevant year end.