The Government introduced Research and Development (R&D) Tax Relief to provide an incentive for UK companies to undertake innovative activities. This would improve competition and technology investment whilst ensuring that the UK doesn’t lag behind global competitors.
In 2016-17, the UK manufacturing sector made up 24.48% of all UK R&D tax claims with 33,880 claims being made in total across all UK industries showing that thousands of businesses are still missing out on the tax relief (Read the full report here).
By undertaking activities that qualify as R&D you could save thousands to put towards new projects or improve current processes or services creating an endless cycle on innovation within your business. Eligible activities can include:
- New Products, New Processes (internal or external), New Services
- Enhanced products, processes, services with improved features, durability, reliability, efficiency, capability, resilience etc.
- Bespoke software programs to integrate multiple systems and improve existing systems
The tax relief works by uplifting the direct costs of the research and development by 130%. If your costs for the research amounted to £100,000, your taxable profit would be reduced by a further £130,000 meaning you save tax or should have tax refunded of £26,000!
The R&DCo, a specialist sector of Howard Worth Chartered Accountants, has already helped hundreds of businesses to complete successful R&D claims including Farming Businesses, Solicitors Practices, Storage & Distribution companies, software companies and more, with tax savings ranging from £4,000 – £500,000. Tax Partner Tim Lwin, who heads the team at the R&D Co said “Quite often businesses think R&D is only for a business with a scientific or technological focus, this is just not the case. Most businesses carry out R&D without even realising it. By speaking with the R&D Co it allows us to share our knowledge on research and development and how it can be straightforward to make a claim and ultimately receive a tax refund.”
“R&D was something I knew little about and I thought it was something big global companies took part in. After a brief conversation with Tim Lwin we quickly realised we had a product that would qualify. Again I thought this would be a long drawn out process that would take many months, even years. Within 8 weeks our claim has gone through and we are expecting a substantial amount of money back from HMRC. I would recommend any person or company that manufactures anything to have a 1-2-1 with Tim and see what you may be entitled to.” – Opticians