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Research and development tax credits for small businesses

Think because you’re a small business - and not necessarily a high-tech one - that you can’t be eligible for research and development (R & D) tax credits? If so, think again.

Eligibility means that profitable companies with less than 500 full-time employees can get an enhanced tax deduction of 2.3 times their actual R & D expenditure – a massive win in terms of reducing or potentially even eliminating tax bills. Those not making a profit can also get up to around 33 pence in the pound back from HMRC on R & D costs.

Eligible projects

There are more than you probably think and not just those in the high-tech sector. Basically, HMRC considers you’re undertaking R & D if you’re:

1) overcoming technological uncertainties
2) looking to achieve an advance in technology
3) Improving modifying or integrating processes or systems
4)  Increasing performance or efficiency

The R&D claims we’ve worked on include:

  • Developing software – eg medical assessments, business compliance, telephony, CRM systems, data collection and analysis
  • Developing new flavours – eg food and drink
  • Developing engineering products – eg high-tech machine tools
  • Developing new manufacturing processes – eg specialist bicycles

Eligible costs

Usually these are:

  • Staff
  • Consumables
  • Software
  • Subcontractors
  • Certain overheads

You can claim your credits through your company tax return – or an amended return within 2 years of the end of the accounting period. You can also submit a calculation and a detailed report to HMRC.

The benefits of eligibility are obvious so give us a call on 01872 272047 or 01326 375587 if you’d like to find out more.

Remember, we really are here to help you prosper.