ONE of the ongoing struggles felt by businesses of various sizes and across a broad range of industries is a lack of finance - and this is especially true for small to medium businesses.
From unforeseen fees to costly overheads, the finances that aren’t accounted for can leave businesses fighting to stay afloat - and once you’re off the ground, how do you stay there?
For a business to grow, exploration is key - and this includes carrying out research and development (R&D) in a bid to help your enterprise, and indeed your industry, to evolve.
Pouring time, money and resource into innovation can be a costly affair for any business, but there is a way to rightfully claim back these expenses - and we’re taking a closer look.
What are R&D tax credits and how do they work?
R&D tax credits are essentially a form of relief payable to your business based on your last two accounting periods.
For company owners who are passionate about researching and developing new services and products, R&D tax credits can be a real lifeline.
This form of tax benefit can be claimed back as a cash payment or reduction on your tax bill - meaning some of the financial risk of innovation is reduced.
Recognising the need to encourage innovation across a variety of industries is a key part of helping UK companies become global leaders.
According to gov.uk, if a company’s R&D project aims to “achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty - and not simply an advance in its own state of knowledge or capability”, that company will be eligible to apply for R&D tax relief.
Who is eligible to claim R&D tax credits?
While R&D tax credits can undoubtedly save businesses a small fortune, the problem is that many businesses are unaware that they qualify for this tax relief.
It’s a common misconception that this form of funding is only relevant to businesses that fall under the fields of science, technology or engineering - when in fact, claiming back R&D expenses can offer invaluable financial aid to businesses across a diverse range of sectors.
When the scheme was first introduced in 2000, only SMEs were eligible to claim.
The SME R&D tax relief scheme is still in place and applies to companies with fewer than 500 employees, with either an annual turnover of under €100million or a balance sheet under €86million - but there’s now also a large company scheme available.
With both of these schemes now in effect, businesses of any size striving to improve existing products and services or looking to develop entirely new products and services could be eligible to claim R&D tax credits.
From building on existing strategies to pursuing new and innovative ways to service your clients or customers, R&D is crucial to any business owner serious about not standing still.