How to improve your cashflow with R&D tax credits

Lubbock Fine, 11 May 2020

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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.

Does your R&D project qualify for tax relief?

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.

What relief could your business receive?

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.

What should you do next?

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. 

If you would like further advice in this area, please contact Chris Sparkes or your usual Lubbock Fine contact.