In April 2000 HMRC introduced a new tax law designed to encourage and reward UK businesses for investing in innovation. With the highest corporation tax relief available its strangely one of the most untapped and misunderstood reliefs, some firms are missing up to £50,000 a year in the form of a cash repayment or corporation tax reduction.
Any company that is taking risks buy innovating, developing or even improving a product, process or service could very well qualify for R&D relief. If you have a technical lead who is struggling to overcome challenges in a project and is scratching their head and wondering how to proceed, this worry could be changed into a wonder with a staggering £15bn claimed in the first 15 years of the incentive.
Find out if one of these misconceptions have been stopping you from claiming this tax credit for your business -
MYTH 1 - Tax credits are for revolutionary breakthroughs - WRONG
You do not need a laboratory full of scientists in white coats it applies to any work done within your company to develop or improve a product. You simply need to account for eligible expenses and any project you are working on.
MYTH 2 - Loss making companies cannot make a claim - WRONG
The rate of relief for a loss making SME is actually more than if you are making a profit. Depending on the amount of employees and your turnover if you report a loss you can claim a tax credit for 14.5% of the surrendered amount.
MYTH 3- You can only make a claim if the research is successful -WRONG
It’s not just god that loves a trier, HMRC will still reward you for trying as long as you can show that you genuinely tried to overcome through R&D meaning you can include unsuccessful projects in your claim.
MYTH 4- It’s too late to apply for the credit for previous years - WRONG
You have 24 months after the end accounting period to make the claim, even if your corporation tax return has already been submitted you can file an amendment. Don't use this good news to procrastinate the claim, get started now.
MYTH 5 -We haven’t maintained timesheets recording all R&D work - WRONG
They do help so if you have them in place keep them for support, but its not a prerequisite for making a valid claim. It's understandable that busy entrepreneurs will find difficulty in tracking all their time and maintaining the records. We would advise you do this as it could mean you are under-claiming time.
MYTH 6 - I cannot include my employees pension payments -WRONG
As well as wages, you can include pension payments and employer national insurance. Some of your subcontractor costs can also be added in along with other consumables you may not have thought allowable.
MAKE INNOVATION PAY
Discover if you are eligible for R&D relief by contacting us for a non obligation assessment.