tax break book

r&d tax credits – one of 9 schemes you should know about

R&D Tax Credits: Have You Claimed Yet?

(Your Competitors May Have)

  • Small companies received £600 million in successful R&D tax credits claims.
  • Number of claims has increased by a whopping 30% in 2012-2013, HMRC recently announced.
  • Steady rise of small and large companies utilising the R&D tax credit scheme, that started life back in 2000.
  • There were 13,010 successful claims last year.

Why did the Government bring in such an amazing scheme?

R&D tax credit was brought in to encourage businesses to spend more money on R&D expenditure, leading to greater investment in innovation.

It works by effectively enhancing the value of the tax-deductible expenditure (therby reducing taxable profits).  If the Company makes a tax loss, this loss may either be carried forward to offset against future profits or surrendered in exchange for a cash lump sum.

There are some restrictions on the types of businesses that may make a claim (such as a business must be liable for Corporation tax), but it’s a misconception that R&D Tax Credits can only be claimed by laboratories with men in white coats!

How to use the scheme to help your cash flow?

Loss making SMEs may use this scheme to claim a cash to fund further innovation or investment of your business (although you don’t have to use it for this purpose).  The value of the tax credit has increased with effect from April 2014 to 14.5% (from 11% in 2012-2013), making the option of “cashing in” more appealing.  However if you are cash rich and in the wonderful position of being able to wait, it is still more beneficial to carry forward the tax losses and to offset against future profits.

In reality though, the benefit of cash today is very appealing, particularly to small innovative companies in fast growing, highly competitive sectors that are keen to secure first mover advantage.

What should you do next?

  1. Download your free guide to the 9 Tax Breaks, Government Giveaways and Grants You Need To Know here:
  2. Learn more about R&D Tax Credits (and similiar schemes, such as Video Games Tax Relief and Patent Box), by speaking to one of our experts on 0203 542 4990.

 About Metric Accountants:

Metric is the only London-based professional accountancy firm to focus solely on providing specialist tax and finance advice to high growth companies and tech start-ups. It is for this reason that Metric has been described as “The first choice for London’s innovative companies”.