If your company is involved in research and development, you’ll be glad to know that the UK government values your work. So much so that they’ve created the R&D Tax Relief, a tax program that offers credit to your tax return based on your research expenditures. The program isn’t for everyone, but filing for it can result in a substantial amount of money on the tax return. Here are five facts you need to know about the research and development tax relief.
1. There are Specific Qualifications
R&D Tax Relief isn’t just for anyone, it’s for very specific kinds of companies. First, your company needs to be of a certain size in order to qualify. Next, your research needs to be technological in nature and fit within the HMRC’s guidelines on what qualifies as a “permitted purpose.” The research and experiments need to satisfactorily eliminate uncertainty and demonstrate an experimentation process.
2. There is a lot of Money Available
The money you can get back from the R&D Tax Relief can be quite substantial, so it’s entirely worth your time to apply and find out as much information about the program as possible.
The specific amount of money you can get back with this Tax Relief varies based on your company’s expenditures and budgets, but in general it goes as follows. For the first three years, of R&D claims, six percent of your total qualified research expenditures become the gross credit of your claim. After these first three years, things change up a little. Starting in your fourth year, a base expenditure credit needs to be calculated. Then, you fill in an adjusted expense line, which is multiplied by 14 percent.
3. It Doesn’t Take Much Time to Complete
While taxes, especially corporate taxes, can be a headache, the research and development tax credit is not one of these things. The calculations and required information are actually fairly simple, and, with the right team at your side, the entire process can be finished in less time than you’d imagine. The trick is finding the right combination of scientists and accountants to help you maximize your claim.
4. Professional Experience is a Real Asset in Making Your Claim
While R&D Tax Relief is quite simple, it doesn’t hurt to get professionals to help you with your claim. The best group of people for helping with this tax program is a combination of scientists, who have the practical R&D experience, and accountants, who understand taxes and finances. Together, this kind of team can maximize your R&D Tax Relief, and Swanson Reed has just that kind of team. So if you’re lacking the professionals you need to make a sound and exhaustive R&D report, be sure to call Swanson Reed.
R&D is complicated but the tax end doesn’t have to be. In fact, with the right people, you can stand to make a fair amount of money back on your research and development. The trick is finding the perfect team to help you maximize your R&D Tax Credit.