The research and development tax credits are a kind of government tax relief which will reward all innovative UK companies.
Those companies who will spend money for developing new processes, products or improving the existing ones are eligible for such R&D tax credits.
They will provide source of cash to that business, so that they can use it towards developing various new products/processes to enhance their existing ones.
You can claim an amount of 33p per £1 spent on innovation. In the year 2016-2017 alone, UK government has paid out massive amount of £3.5 billion to various companies in the form of R&D tax credit.
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What will R&D mean for your business?
This scheme of R&D tax credit means that portion of your money that you invest in various innovation works can always be claimed back.
It is not necessary that you need to wear a laboratory coat in order to claim this R&D credit, but it is scheme which can always benefit your business and help you to grow from a small enterprise to a national corporation.
In order to claim for such R&D tax credits, you need to:
- Fulfil the eligibility for corporation tax by becoming a limited company.
- Your company must carry out certain ‘innovation’ – that refers to qualifying activities for R&D.
- Must have paid some money towards all these activities/projects.
What will count as R&D?
Following are few sectors which can claim for this R&D:
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R&D tax credits for food/drink
Estimated 1% of the claims for R&D has been paid out under this head which means you are likely to miss out 99% on cash for the business.
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R&D tax credits for life-science
UK being a global leader particularly in this sector, hence UK is at forefront of innovation. Therefore, R&D tax claims for life science are great opportunities for various businesses for claiming back money.
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R&D Tax Credits for science & technology
Many businesses associate R&D with their sciences and technology, which is common area for making claims.
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R&D tax credits for manufacturing & engineering
R&D that is regularly done in manufacturing, are sure to get in touch to claim what you really deserve.
How you can claim for the R&D?
Often there can be little misunderstanding about the meaning of R&D and that may create confusion. Even if you try to Google, perhaps you will need assistance to understand exactly what will qualify as R&D and also how you must submit your claim.
There are few companies in the UK, who are involved in various R&D work and they can help you with various businesses so that you can claim your R&D tax credits.
These R&D companies know the language that the tax man too can understand and hence you can be successful in making your claim.
What activities will be eligible for these R&D tax savings?
While claiming your R&D tax, these R&D companies will analyse what really has gone in your R&D process in order to work out the exact amount that you can claim that will include:
- Salary expenses for your staff
- Any freelancer expenses or subcontractor work which may also include in the payments made for subjects like clinical trials.
- Different materials and consumables etc.
- Certain special types of software
