HMRC quietly released its latest annual statistics last week, showing the number of companies claiming cash for R&D activity. Of the 4.7 million SMEs across the UK, only 9,920 claims were made amounting to £420 million in cash payments back to the companies who applied.
The £420 million is split almost 50/50 between companies receiving a repayment from overpaid corporation tax, and those receiving a cash payment because they are not yet in profit.
The tax relief incentive is designed to encourage small companies to invest time and energy in innovation and development, to make our economy more competitive and keep talented engineers, designers, software developers and inventors in the UK. As the Director at RIFT Research and Development, Sue Nelson, explains:
“It’s a great government scheme to enable SMEs get back valuable cash to help them develop their products, services and processes. But time and again we find no one has heard of it, or they just don’t think they are eligible. Even accountants assume their clients need to be wearing white coats and peering down a microscope to be able to claim. This is absolutely not true. The government is simply not doing enough to promote R&D tax relief to business owners, at a time when so many small companies desperately need a cash injection.”
The scheme allows limited companies to claim extra tax relief for people they employ who are working on new developments, and in the first instance they can go back two years when making a claim. For example, if a company employs four people who spend half their time working on a new innovation, and their salary bill is £100,000 a year for this year and the previous two years - the R&D claim would amount to at least £200,000. That’s before any costs for materials or prototypes are taken into account. If they qualify, the company could reasonably expect to get around £50,000 of that back as a cash payment.
According to Sue Nelson: "We are seeing amazing companies out there across the UK, and it makes me really proud when I learn what they do. They are designing and manufacturing new products, developing algorithms to perform new functions or coming up with products and systems that are quicker, leaner, smarter or with new materials. All these things qualify for R&D tax relief and it is very rewarding when we can get a nice lump sum back for them."
RIFT Research & Development is delighted to be working with the Chartered Institute of Building. Together, we’ll be working to ensure that the British construction industry always gets the credit it d...
At 71 years old, the NHS is already 5 years older than the average man expected to live when it was formed in 1948, so we at RIFT thought it was well past time we paid tribute to the greatest of Briti...