According to updated government statistics, there has been a 52% rise in the number of R&D tax credit claims paid to businesses in in the East Midlands. That’s a whopping £145m collective total invested in the region during the last tax year.
What are R&D tax credits?
R&D tax credits are a generous Corporation Tax relief that gives a 230% rate to SMEs. Your R&D tax credit amount is calculated on your company’s R&D expenditure. As a round figure, for every £100 you spend on R&D projects, you get almost £25.00 off your Corporation Tax bill. The government introduced the scheme in order to boost and support innovation across all industries in the UK.
How many claims were made in the East Midlands?
Over one tax year, 2,430 successful tax credit claims were made by SMEs in the East Midlands. That’s 1,595 more that the tax year before. Not only are more companies claiming the R&D tax credits they’re entitled to, but the amount of money paid out in real terms is also up by 12%.
What about large companies?
Large companies can use the new Research and Development Expenditure Credit Scheme (RDEC scheme) to claim their R&D tax relief. This replaces the Large Company Scheme that you may have been acquainted with, as of 2016. HMRC’s definition of a large company for the purposes of this Corporation Tax relief is over £100m turnover or £86m worth of gross assets and more than 500 staff. Now large companies can claim for R&D tax relief even if they are making a loss.
How do I know that my project is eligible for R&D tax credits?
This is the question that puts a lot of people off even making an enquiry. HMRC’s definition of a project that looks for “the resolution of scientific or technological uncertainty” doesn’t help make things any clearer. The terms are left broadly outlined so as to encompass all industry sectors. But unfortunately, many companies simply assume that this tax relief is only for science or technology based businesses.
But your project could be doing eligible R&D without you realising. You need to consider anything where you are improving a service, product or process within your business. It doesn’t have to be bringing a brand new item to the market place, it could be incorporating new tech into your current production systems to improve efficiency.
What many clients can’t believe is that it doesn’t matter if your project fails. You are claiming R&D tax credits for your investment in the research and development phases and the success of the project has no bearing on what you can claim.
The average R&D tax credit claim across the UK is currently £61,514. Imagine what you could do with that investment. Figuring out all the details is time consuming, and many wise business owners employ an R&D tax credits expert to maximise their claim. That way you know all your eligible projects and qualifying costs are included in your accurate claim.
Wherever you are in the UK, DSM R&D Tax Credits will help you sort out your optimised claim as simply as possible. Give us a call today on 0330 0539 112.