R&D, if done well, will enable you to improve existing products, launch new products, become more productive, more efficient or provide a better service.
Firms invest in R&D because they want to continue to grow. They want to develop the product (s) they already have, or develop new ones. They need to stay ahead of the competition, acquire new customers or at least keep hold of existing ones.
Innovation is obvious in technology – new phones, tablets, watches, speakers, headsets and TVs appear all the time. But businesses across every industry and sector want to be lighter, faster, stronger, brighter, more effective or more efficient. Restaurants want food to taste better, supermarkets want it to last longer, Government wants less sugar and salt (‘healthier’ ingredients).
At the same time, it’s easy to see R&D expenditure as a drag on profits, partly because it often takes time for the output and impact of the R&D to contribute to the ‘bottom line’, repaying the initial investment. So R&D is about the longer-term but, if done well, it will enable you to improve existing products, launch new products, become more productive, more efficient or provide a better service.
The benefits of R&D
- Build, sustain or enhance competitive advantage over your competitors and become the leader in your market.
- Build or enhance a USP (Unique selling point) – R&D can help you develop unique products and services. These might be entirely new, or may be improvement or innovation within your existing product or service.
- Increase Income – your R&D could help you generate new or enhanced income streams.
- Decrease costs – your R&D could help you to become more efficient, optimising existing processes.
- Attract investors – R&D activity (particularly if successful) can attract potential investors to your business.
- Generate IP (Intellectual Property) – through R&D, the development of new products and services can also generate new intellectual property for your business which could benefit you financially.
- Build and enhance your brand – engaging in R&D can help SME’s strengthen their brand and reputation.
R&D takes time, effort and resources. The benefits of R&D are, however, potentially significant to your business and – most importantly – there is support available for R&D in terms of grants and potentially generous tax credits.
Tax credits and funding
Jumpstart are the UK’s leading specialists in R&D Tax Credits. SMEs can claim R&D tax relief to reduce their company’s tax bill or, alternatively, choose to receive a tax credit instead by way of a cash sum paid. The average amount claimed by UK SMEs in 2014/15 was over £54K. Only qualifying R&D expenditure will be considered for tax relief purposes but that’s where our expertise comes in. We can also advise you on the range of grants available for qualifying R&D activity.
Jumpstart has helped Aberdeen businesses save substantially more than £6m since 2008, and more than £2m through the recent slump in oil and gas prices. The Edinburgh-headquartered company has been instrumental in assisting local firms claim tax credits on their investment in new processes and technologies, principally but not exclusively in the energy sector. Despite Aberdeen’s oil and gas exploration sector suffering from the worldwide drop in prices, 2015 saw £1.2m recovered from HMRC, and 2016 has seen £840,000 claimed to date.
For a free R&D tax credit consultation and analysis of the potential returns you might expect, contact our Jumpstart representative in Aberdeen and the North East: Ian Donaldson on 07527 635787, ian.donaldson@jumpstartuk.co.uk or visit the website: jumpstartuk.co.uk.