Four ways to Qualify for R&D Tax Credits
When people think of research and development (R&D), they often picture large corporations or specialist science or tech companies. This perhaps explains why, despite the Government’s efforts to encourage innovation for small and medium sized businesses through the introduction of R&D tax credits, only one in five businesses have claimed money back for their time developing new products or processes.
One of the main reasons why the numbers for R&D tax credit claims are so low could be very well due to the complicated nature of processing the claims and business owners may not understand what qualifies as R&D or how to go about making a claim. We have outlined four things businesses which could spur companies to apply for R&D tax credits, some or all of which companies are most likely doing already.
No. 1 If a business manufactures products and is constantly working to improve those products through research and experimentation, this qualifies as R&D.
One surprising thing that many businesses don't realise is that being successful or not in developing a new product or process doesn’t actually matter, and you would qualify for R&D tax credits if you spend on a process or product.
No.2 Modifying existing systems to improve efficiency, capacity or performance is also something that can be claimed under R&D tax credits.
Almost every business, no matter which industry or market it operates in, will want to improve efficiency, capacity for new business and performance. Finding ways to do this will not only increase output and sales in the short term and provide an uplift in profit of the business long term, it will also qualify the organisation for R&D tax credits.
No.3 Creating new systems or software to improve quality of service is another factor that could qualify for R&D tax credits.
When businesses create new software or do some manufacturing development that would enable them to improve their product or service, it’s common to look at ways of integrating the technical advancement achieved into what they do in order to improve service quality. The good news is that this could qualify for R&D tax credits
No.4 Developing bespoke solutions for particular problems can also qualify for R&D tax credits.
Every client is different and there won’t be many businesses that haven’t been presented with a unique problem by a particular client. Principally of course, the work that goes in to developing solutions for a particular problem is to meet the client’s needs. However, it also has the added benefit that it makes businesses eligible for R&D tax credits.
Are you missing out on thousands of pounds each year?
In our experience, UK businesses are some of the most innovative in the world when it comes to advancing their products, systems and services. However, relatively few are aware that this entitles them to make huge savings when it comes to R&D tax credits. Of course, most businesses develop new products and processes simply to meet the needs of clients and customers, yet this quality of service doesn’t only help improve reputation, it could easily save tens of thousands of pounds each year too.
Mirandus Accountants can help
Mirandus Accountants are your local accountants and tax advisers in Farringdon, Holborn, Clerkenwell, Blackfriars, Old Street and also Edinburgh & the Lothians, providing accounting services, tax returns, corporation limited annual accounting and are your trusted tax adviser, providing national and international advice.
You can contact us for a tailored solution to your unique business circumstances. Whether you are an individual, freelancer, contractor or you run a small or medium sized owner-managed business, sole trader or limited company, we can help to minimise your tax burden with our tax planning and tax advice services. We strongly recommend you speak with a tax and accounting specialist like Mirandus Accountants, who can provide expert advice for your business and personal tax planning needs.
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