Many SMEs are facing cashflow challenges during the coronavirus pandemic. However, if your business incurs expenditure on research and development (R&D), you may be able to reduce your corporate tax bill or receive a payable tax credit.
Qualifying R&D is undertaken by many businesses in the course of resolving the scientific or technological uncertainties that their businesses face. R&D is undertaken by businesses working in a wide variety of fields from everything from digital services to traditional manufacturing. R&D can arise in the creation of new products or services as well as in the modification of existing products, processes or services. All businesses should review their scope to claim R&D tax relief.
To qualify for tax relief your R&D costs must meet certain requirements. There are two separate R&D tax relief regimes which apply to SMEs and Large Companies respectively.
We will be happy to advise you on what enhanced R&D relief may be available to your company and which R&D regime applies to you.
A typical SME can obtain an additional 130% deduction on its qualifying R&D expenditure taking the total tax deduction received for qualifying R&D costs to 230%. If your business is making a loss, you may be able to claim a payable tax credit of up to 14.5% of the qualifying R&D costs.
If you are claiming R&D relief for the first time you may be able to go back to the two previous accounting periods to claim R&D relief in respect of these.
At this difficult time, Lubbock Fine can help you to manage the whole process of claiming R&D tax to help you improve your short term cashflow.
We are a full-service firm who can help you through the process from start to finish, from determining if you qualify, through to liaising with HMRC to claim your tax relief.