R&D Tax Incentive Continues to Encourage Innovation in the Business Sector
Innovation in the business sector is further encouraged by the UK government's Research and Development tax relief schemes. It is widely inclusive and offers generous tax incentives to a big range of businesses. Research and development tax credits are no longer just for laboratories and scientists.
Research and development for tax purposes can cover a wide range of activities. It is in fact, wider than one commonly thinks. For example, challenges or difficulties experienced with business projects may be considered eligible for the credit. However, there are some complexities involved with navigating through the guidelines for R&D tax credits. Some companies might immediately opt to work with a specialist to minimise errors and maximise benefits. If you feel you can deal with tax credits on your own, you can also use an online R&D tax credit calculator for convenience. Here is a quick overview of the process.
SME R&D Tax Credits
Small and medium enterprises that qualify under the R&D tax scheme can get tax credit whether they made a profit or had losses within the fiscal year. The tax credit scheme for small business has considerable returns. One the company has been qualified for the scheme, the credit can be given in cash by HMRC or it can be used to offset payable corporate taxes. Either way, it is certainly a win-win situation for any business. Any small business with activities considered to fall under research and development should strongly consider taking advantage of this tax scheme. If you want to check the eligibility of your company, seek the help of a professional now, or check online for additional resources that can help you.
Large Company R&D Tax Credits
The process for filing for a research and development tax credit for large companies is slightly different. There is a specific scheme called RDEC which large companies must file a claim under. The returns will be slightly smaller than the scheme for small businesses, but still significant and worth looking into. Large companies often seek the help of a tax professional because filing a claim may involve some complicated and time-consuming financial computations. Do you have questions about qualifying expenditures and activities for large companies? There are some helpful online resources with detailed examples to guide you.
R&D Capital Allowance
This is more good news for companies engaging in research and development. The company may be eligible to claim 100% allowance for research and development related capital expenses.
If you need further information and detained assistance to navigate the process of filing a claim, there are qualified accounting firms out there that have the expertise to sort out all the complexities for you. Remember that these schemes are in place to encourage small businesses to get involved in innovation. If your company is already aimed towards this goal, you should also take advantage of what the government can do for you in return.