R&D Tax Allowances – Is your company eligible?
With the start of the new financial year now underway, there’s no better time to Spring Clean your finances. So, a good starting point is to familiarise yourself with tax incentives that your business could take advantage of, such as R&D.
Research and Development tax breaks have now been available for small and medium enterprises for 19 years. R&D relief supports SMEs, primarily working on innovative projects in the science and technology industry. The aim being, for the work carried out to make an advancement in the respective industry. In turn this would aid economic growth in the UK.
Despite having been available for so long, very few SMEs are taking advantage of the incentives available. This could also in part be down to a misconception of eligibility. Whilst science and technology are the primary industries, any business carrying out innovative work could apply and qualify. This includes retailers and food manufacturers.
The relief can be claimed in one of two ways, a reduction on your tax bill or a ‘cashback’ claim from HMRC. Claims can also be made up to two years after the accounting period that it relates to, via the Gov.UK website.
Claiming R&D Tax Credits
Claims have been on the rise for R&D tax credits, yet three quarters of claims are for below £50,000. With the UK ranked 4th in the 2018 Global Innovation Index, it’s surprising that more companies aren’t taking advantage of what’s available. A recent Government report has uncovered that although 90% of UK businesses are eligible, they aren’t claiming tax credits.
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