Bag your business’s share of government’s £900m research help
SMEs are cashing in to the tune of more than £900 million a year as they take advantage of a valuable allowance from HMRC which recognises their research and innovation work.
The R&D tax credit scheme rewards firms for their time and effort in researching, developing and refining new products, applications and services. So if your business has been exploring new ways of setting itself apart in its market, whether it’s using cutting-edge technology or just refining age-old business processes, you could claim a slice of this big pie!
South Manchester chartered accountants and business advisers Leonherman have taken on several claims by SMEs for help under the scheme. Their Tax Manager, Campbell Black, says the broad definition of what constitutes ‘R&D’ means there is probably some element of this kind of work involved in what many businesses do.
“Many businesses have been involved in some kind of research during their life cycle, and through this scheme, they can claim just reward for their work,” Mr Black adds.
The real benefit for R&D tax relief for businesses in their formative stages which are not yet turning a profit is that it can be applied in one of two ways – either by being carried over as a trading loss into future years, or this loss being surrendered in return for a cash payment from HMRC.
Such has been the success of this scheme that, says Mr Black, it has become an important source of funding for many SMEs, especially those in tech-related fields. As a result, the amount claimed in 2015-16 was 45 per cent up on the previous year.
“The £905million which was granted in cash payments for the 2015-16 financial year represents the equivalent of several mainstream investment funds – that makes R&D tax relief a real lifeline for tech start-ups and innovative SMEs which are working to develop products and services, but which are not yet breaking even,” he says.
As a result of many of these businesses not having to resort to seeking external funding, it means some are likely to be able to keep control of their vision and plans for their future, rather than have to surrender a stake in their venture.
An important factor in raising awareness of the availability of R&D tax credits has been the removal of a minimum spend of £10,000 on R&D before a business qualifies for help, notes Mr Black.
“This has brought many much smaller-scale projects within the scope of the scheme, so we would say to businesses which are unsure whether any of their work has qualified for help, that they should contact us to get advice.”
You don’t need to have made a technical breakthrough, or developed a new product to claim funding. Leonherman has helped businesses working in sectors as diverse as architecture and power generation to make successful claims.
And the scope of allowable expenditure under the scheme is also very broad, covering the likes of energy and software development costs, in addition to direct staff costs for the time spent on the research.
“There is no hard and fast definition of what constitutes R&D costs which are allowable under the scheme, so if you’re unsure about whether work your business has done qualifies for assistance, contact us, and we will evaluate it, and confirm whether you have a valid claim.”
So to get sound advice to help your business claim its share of the rewards for its R&D, call Leonherman on 0161 249 5040, or email