Tax Savings Ideas – Idea No. 5 – Claim Research & Development Tax Reliefs

Tax Savings Ideas – Idea No. 5 – Claim Research & Development Tax Reliefs

Each week we are sharing a series of tax saving ideas that are relevant to entrepreneurs, family businesses and owner-managed businesses.

Our fifth tax saving idea in the series is: 

Claim Research & Development Tax Reliefs

R&D Tax Relief provides companies with the opportunity to claim generous tax savings for their innovative activities.The opportunities for making a claim are often overlooked however, with business owners overestimating the level of innovation required to claim. Projects qualifying for R&D relief include those seeking an appreciable improvement in science or technology.

So, if a company is paying people to solve technical problems, there may be scope to claim if it is:

  • Modifying a manufacturing process.
  • Developing bespoke software.
  • Creating a new product or improving an existing one.
  • Eligible companies can obtain tax relief on qualifying expenditure either by reducing taxable profits or creating (or increasing) tax losses which can be sacrificed to HMRC in return for a cash repayment.

    The relief available is very generous and a SME incurring £100k of qualifying costs could save in the region of £25k in tax.Claims can go back two financial years, so first-time claimants can particularly benefit.

    Large companies can claim under the RDEC scheme which provides a 10.5% repayable credit after tax for every £1 spent.

    As always, the key to successful tax planning is to seek advice as early as possible.

    If you would like more information or would like to discuss your tax affairs in more detail please contact:

    Steve Crompton

    Lucy Williams CTA


     

     

     

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