Are you aware that businesses can claim payment back from the Government for a variety of costs, provided they were spent on innovative Research and Development (R&D) related projects?
HM Revenue & Customs (HMRC) revealed in June 2020 that from 2018 to 2019, there were 59,265 R&D tax credit claims, 52,160 of which were in the Small and Medium-sized Enterprise (SME) R&D scheme.
In total, £3.5 billion worth of R&D tax reliefs were granted last year.
Unfortunately, a lot of companies miss out on these tax reliefs due to the confusion among the SME community that only large firms or the most innovative projects can claim.
So, what can SMEs claim?
SMEs can benefit from R&D credits such as the SME R&D Relief if they have fewer than 500 employees or a turnover under 100 million euros.
For a project to be eligible, it must meet the following criteria:
- It must involve a search for an advance in science or technology.
- Alternatively, you could describe how you defeated a challenge on this project that could not be easily done by an expert in the same domain as your project.
With this relief, SMEs can subtract an extra 130 per cent of their qualifying R&D expenses from their annual profit, plus the normal 100 per cent reduction, which makes 230 per cent. Therefore, a further 33p is given for every £1 spent on R&D.
You must seek expert help when applying, such as our specialists at Thompson Wright, as the eligibility and criteria for R&D tax reliefs can be complex. Contact us today to find out more.