Because research and development activities significantly contribute to the intellectual and economic advancement of the country, programs have been developed to provide relief to small and medium enterprises participating in these activities.
If you have a company that does a lot of research and development, you will want to look into the R&D tax claims you can make. In some cases, you can get reimbursement for up to 33% of your development costs.
As your fiscal year end tax return deadline approaches; knowing what you can claim, how much you might get back, and the protocols you have to work within can be extremely important.
There are some chief differences between business grants and research and development tax credits. Business grants can be either public or private grants, or subsidies recognised by the European Commission. These grants are given to the company with the express purpose of funding a project or research while R&D tax claims are made after the project has commenced and tax filing time has come.
When assessing research and development projects, knowing which ones qualify for R&D tax credits can help you plan your budget and strategise for certain projects. When spending money on these types of projects, it is important to understand how these credits are calculated, and what it could potentially mean for your business. Companies can currently claim up to 32% of their expenditures through R&D tax claims.
UK research and development is at an all-time high and the research and development (R&D) tax credit schemes that were instituted in 2000-01 have played a large role in this. The R&D tax credits are there to offer incentive for investing heavily in R&D, overcoming uncertainty in technological and scientific processes, and the creation of and experimentation with new technologies. Businesses of all sizes are allowed to make research and development tax claims but small and medium enterprises (SMEs) have especially benefited from this programme since investing in new technologies can be cost-prohibitive.
The research and development (R&D) claim form (correctly referred to as a Corporate Tax Return) is the official means of being able to claim tax credit payments that you are entitled to under the United Kingdom (UK) tax code.
These tax credit changes can only be claimed within certain circumstances, such as if your company is set-up to be liable for paying corporation tax (CT).
There are other stipulations that must be met as well such as those that are outlined briefly below.