When we think of Research & Development, we tend to think of science and tech businesses, but R&D can be found in any industry. R&D is any work that focuses on experimentation and innovation by creating new products, processes, or services or improving existing ones.
Have you changed processes to improve efficiency? Have you adopted technology like apps or platforms which you've built or modified yourself? Your business could qualify for R&D.
Software development, engineering design, new construction techniques, bio-energy, cleantech, agri-food, and life and health sciences are all examples of R&D activity.
But why should businesses invest in R&D?
A culture of R&D gives your business a competitive edge by helping you adopt new technologies, break into new markets, and stand out from the competition. R&D also fosters a culture of innovation. Businesses that invest in R&D are constantly pushing boundaries to achieve their goals. Pursuing new ideas and identifying opportunities for change, growth, and development will help you become more agile and dynamic as a business through the ability to experiment, overcome problems, and find innovative solutions.
It's true that experimentation always comes with some element of risk– you risk losing time, money, or resources if a new project is a flop. R&D Tax Credits help to remove those risks by rewarding businesses that actively pursue innovation.
What are R&D Tax Credits?
R&D tax relief was introduced by the government to support and incentivise innovation amongst small and medium-sized UK businesses. A business can receive a cash credit, lowered corporation tax bill or a combination of the two for any qualifying R&D expenditure. With R&D, uncertainty becomes something to be embraced, as businesses are rewarded for taking risks. Risks that could vastly improve products, services, or processes.
When it comes to tax relief, R&D Tax Credits are one of the most underutilised. On average, SMEs claim R&D Tax Savings of over £48k per year, and you could be claiming back up to £33 of every £100 spent, where the expenditure qualifies as Research & Development. That's cash you could be investing back into your business to fund your next big project, hire, or idea. Invest it back into innovation and receive an even larger R&D tax credit.
When used strategically, businesses can accelerate R&D activities and use the rewards to fund the future growth and development of their business.
What qualifies as R&D?
To qualify for R&D, you must be making improvements to products, processes, or services, with the development helping to overcome business challenges.
To be eligible to make a claim, you'll also need to be meeting these two key criteria points:
- Making a considerable improvement to existing technology. This doesn't always mean it's ground-breaking or innovative work. If you're working to make products, services, or processes faster, less expensive, or better in some way, then this may be eligible for R&D tax relief.
- Overcoming technological challenges. This is especially where the solution is not immediately obvious to a qualified professional.
To get R&D relief you'll need to explain how a project:
- looked for an advance in science and technology
- had to overcome uncertainty
- tried to overcome this uncertainty
- could not be easily worked out by a professional in the field
If your business is taking a risk by attempting to resolve scientific or technological uncertainties, you could also qualify for an R&D claim.
How to make a claim
Think you might have a claim? The process is straightforward and only requires 1 hour of your time.
- 15 minute call to determine if you're eligible to make a claim
- 45 minute consultation to capture the necessary data to make the claim
- We'll produce a detailed report to support the claim to HMRC
- We'll review and submit the correct information to HMRC
- You'll receive the tax saving in the form of a payment from HMRC or a tax deduction.
Think you have an R&D tax claim? We can help!
We love challenging boundaries, and we're on a mission to help innovative businesses get to where they want to be.
We can help you judge which projects and activities qualify for R&D tax relief.
We recently helped two construction businesses who thought they had no tax refunds to claim. Between the two of them they got £32,541 repaid by HMRC.
We've made successful claims for businesses in construction, wholesale, and professional services, and we're open to exploring claims in any industry.
Get in touch to find out more and book in for a call with our R&D specialists.