UK Government Pledges To Increase Research & Development Expenditure Credit
The election manifesto was chocked full with promised to drive businesses forward in Britain. The Conservative Party have finally managed to push through Brexit and UK Businesses can "emerge from years of uncertainty and plan for the future".
With the Research & Development Tax Expenditure (RDEC) increase, Large Enterprises can now claim 13% on expenditure contributing to the Research & Development process - including cost of facilities, materials, wages, utilities and more. SMEs can currently claim up to 33% for every £1 spent on their innovations. Last year alone a whopping 83% of R&D Claims were collected by Small to Medium enterprises, as an incentive for working through uncertainty, to encourage their continued growth.
An article by Business Matters Magazine brought to the attention of many that the payouts from R&D Tax Credits "could pay 178k UK salaries for a year". Since being created almost 20 years ago, the rate Research & Development Tax Credits claims has increased by 35% annually. Despite the rapidly growing rate of innovation being rewarded, it is still being reported that the initiative is still not being used to its full potential.
R&D Tax Credits are pushing more innovation, creating jobs for great minds and growing the younger generations for the future. HMRC believe in this policy because year on year, more businesses are working on contributing to their sectors and the rewards, only channel more growth.
How do I find out if my business can claim?
The most up to date report from Gov.uk on Research & Development Tax Credits states that to qualify for a Claim, you must explain how your business: > Looked for an advance in science and technology
> Had to overcome uncertainty
> Tried to overcome this uncertainty
> Could not be easily worked out by a professional in the field
Quoted Directly from Gov.UK
All sounds very lab coats and test tubes right? Wrong. Like we said before, the vast majority of claims in the UK come from SMEs; some had, but many SMEs trial and testing don't have to re-invent the wheel.
How do I start a claim?
Now, this is where things start to get a little more complicated. To create your claim, you need to: > Work out the costs that were directly attributable to R&D.
> Reduce any subcontractor or external staff provider payments to 65% of the original cost.
> Add all costs together.
> Multiply the figure by 130% to get the additional deduction to put in to your tax computations.
> Add this to the original R&D expenditure figure to get the enhanced expenditure figure which you can enter into your tax return.
Quoted Directly from Gov.UK
Some businesses choose to build their claim with their accountants. But, did you know, that a number of the UK's leading accountancy firms are now parented with an R&D Tax Claims Company. Since getting more clued up about the number of "fraudulent" claims submitted in the UK, they've tightened the reigns on qualifying reports.
If you haven't thoroughly understood the process and put together a report that's 100% competent with HMRC, but you could also face a fine if your claim is unsuccessful and gets flagged as fraudulent. Why Use an R&D Tax Expert?
When using a trustworthy R&D Tax Company to build your report, not only are we taking on the financial risk so you don't have to - this is what we do all day, every day. We leave no stone untu
rned, and maximise every area of your claim. We're dedicated to helping companies all over the UK to claim their entitlement in full. (including Northern Ireland - the lowest claiming area of the UK due to uncertainty.) To find out if you can claim, contact one of our agents on Linkedin, call 0161 495 7253 or click here to tell us about your business.