Research and development (R&D) tax relief is a valuable Government subsidy that can significantly reduce your company’s tax bill, and even get you some cash back.
What is R&D Tax Relief?
R&D tax relief is a means of encouraging companies to innovate through a financial reward for developing new technologies to substantially improve products, processes, devices, materials and/or services.
Companies which are eligible for the tax incentives are extremely diverse. We have prepared claims not just for high technology companies in software, aerospace, defence, automotive etc. but also more 'traditional' manufacturing and engineering companies.
All companies, large and small, can claim if they undertake qualifying work - even if they do not pay corporation tax because they are unprofitable.
- Development projects can qualify for a claim even if they are subcontracted to or by the company, or if they are funded or subsidised by other people.
- The development does not need to be successful - abortive or failed projects can be included in the claim.
- ‘Capitalised’ development costs can still qualify, even though the costs are effectively spread over a number of years in the company’s accounts.
What is R&D Tax Relief worth?
The additional tax relief can effectively deliver a retrospective subsidy of:
- 26% to 33.35% of qualifying R&D costs for small and medium-sized companies;
- 6% to 8.8% of qualifying costs for companies claiming under the large scheme.
Which costs qualify for R&D Tax Relief?
Certain costs incurred in undertaking eligible development work can qualify for enhanced tax relief and credits. These include:
- Staffing costs and agency workers – for time spent directly and indirectly on R&D.
- Consumable items – including power and water costs, software used for R&D and consumable materials.
- Certain payments to sub-contractors.
- Prototype costs.
A claim for R&D tax relief and credits must be made within two/three years of the expenditure being incurred, depending on the date of the company’s accounting year end.
How can Hazlewoods help?
Hazlewoods R&D tax specialists have a wealth of experience in preparing R&D tax relief claims and make the process quick and painless. With the benefit of our knowledge and experience, most claims that we prepare are processed efficiently by HMRC and repayments are usually made within a matter of weeks.
In the year to 30 April 2016, the Hazlewoods Innovation Team identified qualifying R&D expenditure of over £27.6 million for our clients, generating R&D tax repayments of nearly £4.9 million.
Don’t miss out! Contact us today to arrange a free initial consultation to explore whether your company could benefit from making a claim.