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COVID-19 Advice for business - R&D tax reliefs - assistance with cashflow - news article image

COVID-19 Advice for business - R&D tax reliefs - assistance with cashflow

27 Apr 2020

2 minute read

As COVID-19 continues to impact on the day-to-day operations of businesses, considering all potential sources of income and short-term cash is key.

One option to explore is Research and Development (R&D) tax credits, which are available for innovative companies working on projects to develop new products or services, change processes or to do things differently.

Companies that are eligible for the tax incentives are extremely diverse and this tax relief is still under claimed and somewhat misunderstood.

What are R&D tax reliefs

Research and Development (R&D) tax reliefs were introduced by the UK Government to reward companies for investing in innovative projects. Billions of pounds worth of funds were highlighted for such relief in the last Budget (March 2020)

 The key features of R&D tax credits schemes are:

  • You can claim retrospectively for the previous two years of up to 33.3% of qualifying expenditure identified
  • HMRC have accelerated processing; in most cases, the cash payment is received by the company in just over one month from the filing of the claim
  • The paperwork is relatively straightforward; unlike grant funding, the application is ‘free-form’, through an amendment to the company’s self-assessment tax return
  • You can offset the claim to decrease profits and reduce future tax liabilities

R&D encompasses a much wider range of activities than most people realise

R&D does not just relate to the development of new products. If your company has previously undertaken technically challenging work, you should explore whether you are eligible for R&D tax credits.

Who can claim? 

All companies, large and small, can claim if they undertake qualifying work – even if they do not pay corporation tax because they are unprofitable.

Small- and medium-sized companies (mainly those with fewer than 500 staff), can generally claim a credit worth 25% to 33% of their eligible R&D expenditure, while for larger companies the credit is usually worth around 10% of the expenditure.

The average claim for an SME is over £50k

The average claim for R&D tax credits for an SME is over £50k (with the large company ‘RDEC’ claim being much higher), this can be invaluable for driving growth in a business or helping to protect you against economic challenges such as COVID pandemic we currently find ourselves in.

How can Shaw Gibbs help

The most successful claims for R&D Tax Credits deliver both strong methodology (that stands up to HMRC examination) and maximised benefit. There’s a lot of uncertainty around R&D so it really pays to seek specialist advice in making sure all your eligible costs are included.

We can help you identify eligible work and use our knowledge to help you maximise your company’s R & D claims.

if you already know that you will qualify for R&D relief or you simply want to know if there is any company expenditure that may qualify, please get in touch with me for a no-obligation phone/video consultation.

COVID-19 Advice for business - R&D tax reliefs - assistance with cashflow - news article image


Leigh Smith

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