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R&D Tax Credits, Do You Qualify? | Pentins Business Advisers
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measuring the size of red cubes with TAX written on them

R&D Tax Credits, Do You Qualify?

Not claiming your R&D tax credits? If you invest in developing new products, services or processes, it’s possible that you are overlooking a very valuable source of funding indeed.

R&D tax credits have been around for 15 years, they were introduced to encourage innovation amongst SMEs. So they’re not new but recently the value of the tax credit have substantially increased – the average payment is approaching £50,000!

How much are they worth?

The actual value of the tax credit is determined by when the expenditure was incurred and whether the business is profit making or loss making, but payments can be as much as 32% of your R&D cost!

Do you qualify?

As is often the case with Government grants that’s not an easy question to answer. Although the law is written to be explicit it leaves much room for manoeuvre both by the applicant and by HMRC!

Broadly speaking the project must show both innovation and risk. In the words of the HMRC the project must seek to

“achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.”

It sounds quite daunting but put simply if your business is taking a risk by innovating, improving a product or service or by developing or improving processes you may be eligible.

Although you can submit a claim yourself the complex nature of the legislation and the difficulty in building a clear and fully costed case means that it may be advisable to seek expert help.

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