Research and development tax credits are a great way for people who are trying to make breakthroughs and revolutionary discoveries to claim back a bit of the money they are spending on these projects. However, a recent study would seem to suggest that more and more manufacturers and companies aren’t claiming the R&D tax credits they are entitled to. We’re taking a look at this in closer detail, to see if we can get to the bottom of it.
What has the study shown?
The study shows that only 59% of people who could claim these tax credits do. This means that a very worrying 41% of individuals or organisations who could claim these tax credits are missing out. A further report suggests that only 39% of companies and organisations felt confident that they could access these kinds of tax credits, and around 10% were unsure if they could even apply for research and development tax credits at all.
So, what should be done in light of these findings?
These findings are very concerning when we take into consideration the number of people who are eligible for these kinds of tax credits but instead choose not to claim them. The best way to ensure that this does not continue is to bring people up to date on what constitutes ‘being qualified’ to receive the tax credits. If you’re trying to create a new service or product, or modify an existing one, you could very well be eligible for this tax credit. As well as this, you could be eligible for R&D tax relief if you are pushing beyond current scientific or technological boundaries, or testing the practicalities or something that has been purely theoretical.
Checking with a reputable source like us will also help you to identify if you are suitable for tax credits. 10% of the organisations in the findings were unsure as to whether R&D tax credits were applicable to their business and this is an issue because it’s highly likely that a large quantity of them are, in fact, suitable. We urge that you do seek us out, as we’ll be able to help you identify if you do have a claim for research and development tax credits.
What about the manufacturing industry?
There are many sub-divisions of the manufacturing industry, such as those that produce; paper, food, chemicals, petrol, wood, metals…products made from any material are created by that niche element of the manufacturing industry. All of them are engaged in some kind of innovative developments, although companies may not recognise it as being part of HMRC’s definition of R&D for tax relief.
The types of work that often go unclaimed include (but are not limited to):
- merging old systems and new technology
- increased production capacity
- integration of new materials
- increasing the efficiency of internal processes
Overall, the number of people who could claim these kinds of tax credits and haven’t is something which needs to be remedied wherever possible. Making sure that you know whether or not you are eligible for R&D tax credits is really important to ensure that your company is receiving the financial help it is entitled to.
The tax credits can be a great way to provide an alternative way of funding your research, so if you can request them, then you definitely should. If you’re unsure, then please feel free to contact a member of our team, and we’ll do our best to help you.