Do you know about the UK R&D Tax Relief Scheme?

My first ever blog post so be kind please,

I wanted to write this a raise some awareness to those business that might need some additional support. If you know about this then excellent but if you don’t, this post is for you, and I hope it helps. This info is NOT new but its surprises me how just last week alone speaking to business owners they were unaware of the benefits available….so thought I would share.

I see my role as a recruiter not only to supply the top talent to my customers, provide recruitment solutions and build long lasting relationships but also to raise awareness to those which might be in need of support or even guidance (and sometimes not even know it) – please don’t miss interoperate me, I’m not the smartest or even pretend to be (you might gather this from the odd typos or grammatical error throughout my post) but by surrounding myself with the very best talent (whom I know call friends) in my industry, I’m lucky and grateful to pick up and learn quite a lot from those much smarter and astute than I.

Another reason why I wanted to share is with the tough economic climate we are all currently facing, Companies Struggling, Banks needing Bailouts etc this could be the real difference and helping your business maintain and even grow and avoid having those difficult redundancy conversations that have huge negative effects on people’s lives – from experience its awful and I can even help 1 person avoid that with this post as raising awareness to something they didn’t know was available to their business which saved someone’s job let alone a whole company then it’s worth it.

Right back to the point of this post….

If you are a Small or Medium Sized Enterprise (SME) you could be eligible for R&D Tax Relief which will enable you to:

Deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction.
Claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss

To claim the relief, you need to be a SME and show how your project meets the GOV.UK definition of R&D.

Companies who are making their first R&D claim can qualify for Advance Assurance. If Advance Assurance is granted, any R&D claims in the first 3 accounting periods will be accepted if they’re in line with what was discussed and agreed.

Companies that can claim relief.

You can claim R&D tax relief if you’re a SME with:

Less than 500 staff.
A turnover of under €100 million or a balance sheet total under €86 million
If your company has external investors, this can affect your SME status. You may need to include the figures of connected companies and partner companies when you work out if you’re a SME.

You cannot claim SME R&D relief if the project is already getting notifiable state aid or you’ve been subcontracted by another company. However, you may be able to claim the R&D Expenditure Credit (RDEC).

Connected companies.

The staff, turnover and balance sheets of any connected companies should be included in your total. Your company is connected to another one if:

It holds over 50% of the voting rights in another company.
Another company holds over 50% of the voting rights in your company.

Partner companies

You have a partner company if:

Another company holds over 25% of your voting rights or capital
You hold over 25% of another company’s voting rights or capital

Costs you can claim:

Employee costs

Salaries
Wages
Class 1 National Insurance contributions
Pension fund contributions

You can claim for administrative or support staff who work to directly support a project. For example, human resources used to recruit a specific person to work on the project. You cannot claim for clerical or maintenance work that would have been done anyway, like managing payroll.

You can claim 65% of the relevant payments made to an external agency if they provide staff for the project.

Subcontractor costs:

You can claim 65% of the relevant costs of using a subcontractor for your R&D activities.

Software

You can claim for software licence fees bought for R&D and a reasonable share of the costs for software partly used in your R&D activities.

Consumable items

You can claim for the relevant proportion of consumable items used up in the R&D. This includes:

Materials
Utilities

Clinical trials volunteers

For R&D projects in the pharmaceutical industry, you can claim for payments made to volunteers involved in clinical tests.

How to claim R&D relief? Click Here and it will take your straight to the GOV.UK Website to start your application.

And in some cases, I’m sure this will enable many companies to reduce their costs and be able to compete for much needed talent against larger more development organisations.

I hope this has helped you and your business.

Additional Helpful Links: