Chamber R&D Tax Relief – with Chamber Patron Members: Jackson Stephen
For many years there has been the misconception that R&D claims can only be made for cutting edge and brand new products. This has led to thousands of potential claim opportunities being missed.
R&D claims are not limited to those businesses that work in the pharmaceutical industries; in fact, Jackson Stephen have made successful claims across most industry sectors. One of the main criteria for a successful R&D tax credit claim looks at whether something has been significantly improved. This can be as simple as making something lighter, faster or simply more efficient.
In fact, R&D is not limited to creating or improving products, as making your manufacturing process more efficient also falls within the definition of R&D as does software development. The key to a successful claim is being able to show that you have been attempting to make some form of advance or overcome technological problems.
As a result, a wide range of industries can claim R&D credits, we have seen successful claims for companies as diverse as food & drink producers, building contractors, software designers and slipper manufacturers. In fact the largest single claimants of R&D tax relief are banks who spend significant amounts developing in-house software.
With effect from 1 April 2012, small or medium-sized enterprises (SME) are entitled to claim a tax deduction equivalent to 225% of their qualifying expenditure in the year. For example, if you spend £10,000 on research and development, you are treated as if you had spent £22,500 when calculating your taxable profits.
From 1 April 2015 the tax deduction available to SME’s is now 230%.
The net result of this is a reduction in the tax payable for a profitable company now and in future. But R&D is not just for profitable companies. A loss making company who is undertaking R&D may surrender losses and claim a refund equal to 14.5% of the surrendered loss (this equates to just under 33% of the actual expenditure.) The rate of surrender prior to 1 April 2014 was 11% of the surrendered loss.
Claims need to be made within 2 years of the company’s year end. This means you can potentially claim for all qualifying expenditure incurred in the past 36 months.
Whilst the R&D process can be complex and the claim looks at a variety of areas where costs are incurred, Jackson Stephen can guide you through the process and do the bulk of the analysis for you.
For more information on the Chamber’s R&D tax relief service, with Jackson Stephen, contact the membership department on (01772) 653000 option 1