There have recently been some changes introduced to widen the scope of this scheme aimed primarily at SME businesses. In case you are not aware, these are a form of tax relief designed to help businesses by way of reduced tax payments. They can also be ‘traded in’ for cash if the business is not yet profitable.
It is well-worth spending a moment to consider whether your business may be eligible to make a claim. The criteria for qualification is quite narrow, but at the same time you needn’t be a purely R&D business to benefit:
- can any project(s) be identified that include an element of research and/or development?
- were they undertaken for commercial reasons, and cost more than £10k within a 12 month period?
- was there some degree of scientific or technological uncertainty?
- were these uncertainties resolved?
Answering yes to those questions (more or less) is a good starting point. In case you are wondering, the broad definition of R&D in this context is as per the applicable accounting standard, SSAP 13.
What constitutes a project is the subject of some debate, but a good indication can be found in the 2004 Guidelines (see: http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD81900.htm). Note also that R&D work carried-out for a client may be eligible for the relief.
The recent changes mean that the business will now save up to 21p off its tax bill for every £1 of eligible R&D expenditure identified and claimed, in addition by the way to the saving made in incurring the tax-deductible expense in the first place.