writes Kapil Davda, director, Haines Watts.
Tax benefits hidden within your work could give you an edge on your competitors.
Uncovering innovation within a business is rarely a simple process. You’ll often find it buried within different aspects of an organisation, and in some cases it’s even outsourced. Sadly, only a fraction of eligible companies are actually claiming. Many business owners say to me: “We don’t really do R&D”.
The very term ‘R&D’ (Research and Development) often deters many firms from applying. The reality is, for those who work outside of the science and technology sectors, it is a term that’s seldom used in day-to-day work and therefore they assume they aren’t eligible.
Whether you’re a digital agency designing a new app, an architect improving building efficiencies or a food manufacturer developing production techniques, innovation can come in all different shapes and sizes, and is seldom bound by industry.
A healthy benefit
The tax benefits of R&D relief are potentially huge. The average claim for a SME can generate upwards of £55,000 in tax benefit – a worthwhile venture in anyone’s book.
The numbers speak volumes
R&D relief enables a company to deduct an extra 130% of qualifying costs from its yearly profit, as well as the normal 100% deduction, to create a 230% total deduction. Qualifying expenditure can include costs spent on staff, software, transformed/consumed materials and subcontractors.
Last year Haines Watts achieved 100% success rate helping over 1,750 clients all over the UK recoup an average of over £55,000 in cash refunds through R&D tax credits, and helped businesses save over £70 million in total. In turn, this has enabled business-owners to reinvest in innovation, future-proof their companies and, most importantly, ignite further growth.
What’s more, your R&D projects do not need to have been successful – it’s the time and money invested in developing new processes, products or technology.
Vast numbers of these problem-solving businesses are neglecting the hidden value of innovation – with an estimated nine out of 10 eligible SMEs failing to claim for R&D tax relief.
If you’re unsure if you could qualify for tax relief, it is absolutely worth speaking to a R&D specialist. The potential dividends could transform your business and help you realise your financial goals.
To discover more, contact your local Haines Watts office.