Tax Planning and Advisory Services
The ever-changing tax landscape requires up-to-the-minute financial knowledge, whatever your business.
What Tax Relief is available
Now more than ever, cash flow may be a key concern for many businesses who have insufficient working capital and funding, critical to ensure business continuity.
R&D Tax Relief
Although the Government has implemented measures to support businesses during this pandemic, it is felt that the Coronavirus Business Interruption Loan Scheme may be inaccessible to many.
However, there is already a way to obtain access to funding from the Government. This is in the form of R&D Tax Relief.
These are government incentive schemes administered through the tax regime and are designed to reward businesses who are attempting to innovate through the development and improvement of products and processes.
R&D Tax Relief is available to a wide range of businesses of any size and in any sector. There are two regimes: one for SMEs and the other for large companies, called the Research and Development Expenditure Credit (RDEC).
The credits are designed to reward businesses who are attempting to innovate through the development and improvement of products and processes.
The Criteria for Eligibility
This is very broad, so if you believe that any of your clients are ‘innovative’ it may be worth looking at in further detail. Projects or work undertaken do not necessarily have to be new products – they can just as easily apply to innovation in overcoming technical problems, making improvements to existing processes, or building and integrating new systems. Therefore, all business sectors of the economy could qualify - not just 'techy' businesses.
Recent budget announcements have also reported enhancements to the R&D tax relief scheme so now these are even more rewarding for those eligible.
The benefits
A business could obtain a cash benefit of up to 24.7% of the expenditure if it is making a profit, or a cash refund of up to 33.4% if it is making a loss. This means that if the business spent £1,000,000 on qualifying R&D projects it could receive a tax refund of £247,000 (profit-making) or a tax credit of up to £333,500 (loss-making).
In terms of turnaround, a successful claim should result in a refund paid within around 4-6 weeks of the R&D claim being submitted to HMRC, so for businesses with strained cash flow, this is a very effective means of maintaining business continuity.
Get in touch
If you believe your business is eligible for R&D tax relief or if you would like to discuss other reliefs available, please do not hesitate to get in touch using the form below.