Page 5 - Should you be claiming R&D tax credits

WHAT ARE R&D TAX CREDITS?
What are
R&D TAX CREDITS?
What are the benefits?
R&D Tax Relief applies to both profit making companies paying Corporation Tax and also loss-making companies who are not, both are able to claim for eligible activities. Relief can be received as lowered Corporation Tax or in some cases as a payable Cash Credit.
If you have not claimed before you can claim for your eligible activities for the current accounting year as well as retrospectively for the two previous years. However, you must claim within two years which means that if you wanted to claim for two years ago you would need to do this before the end of your current accounting year.
h The amount you can claim for depends on the size of your company and the period for which you are claiming. The relief uses the concept of Enhanced Deductions. If you are a SME and have £100,000 of eligible expenditure then this will be ‘Enhanced’ by 86% to £186,000. This enhanced expenditure can reduce the amount of tax you need to pay or create a loss that can be exchanged for cash.
h The calculations are many and varied so the simplest way to help you understand what you might get in the form of SME tax relief (dependent on a number of contributing factors of course) is around 21.5p for every £1 you have spent on eligible activities.
THE KEY IS TO IDENTIFY AS MUCH ELIGIBLE EXPENDITURE AS YOU CAN; THE MORE YOU IDENTIFY, THE GREATER THE VALUE OF THE RELIEF YOU’LL RECEIVE FROM HMRC.
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