Let’s face it; nobody enjoys paying tax, especially corporation tax that feels like it’s penalising success.
It turns out that loads of businesses could actually claw back some of the corporation tax they’ve paid, and yours could be one of them. What would you do with this extra cash? You could use the money to invest in your business, or pay your employees more. In fact the Institute for Fiscal Studies told the FT that “lower corporate taxes may feed through into higher wages in the medium term.” That’s a win for everyone.
If your company pays corporation tax and invests in research and development then you could claim tax relief on your investment. This could be a lower corporation tax bill or a cash payment if your business isn’t in profit.
Don’t have a dedicated R&D department or a lab filled with geniuses in lab coats? Worry not. We know R&D comes in a variety of forms; whether you’re researching more efficient processes or developing a brand new product. Take a look at this list of eligible companies to get an inkling of the multitude of different businesses that could benefit from R&D tax credits.
The government is encouraging businesses to claim R&D tax credits as part of its support for small businesses. But why?
The Economic and Social Research Council found in a recent study that R&D tax credits are a great thing for private R&D investment. These tax credits aim to encourage investment in small businesses. Don’t believe us? The Federation of Small Business found that small businesses accounted for 47.8% of private sector employment in the UK at the start of 2014. The government is flying the flag for small businesses, and we’re here to make sure you don’t miss out.
The R&D tax credit scheme was first introduced in the Finance Act 2000. Since then, the relief from SMEs has increased from 175% to 230% in the latest Budget. The government says that innovative companies are an important contributor to economic growth. The global financial and economic crisis of the last decade has prompted member countries of the Organisation for Economic Co-operation and Development (OECD) to promote innovation and encourage research and development to restore sustainable growth.
“As both financiers of R&D activities throughout the economy and also performers of R&D themselves, governments play a key role in supporting a country’s innovation system.” - OECD.
Luckily for businesses like yours the British Government is committed to ensuring the effectiveness of R&D tax credits in helping businesses grow, and their focus is on helping small businesses. In the Budget 2015 the Chancellor said: “Following consultation, the government will implement a package of measures to improve the accessibility of R&D tax credits for smaller businesses, including producing new guidance aimed at smaller firms and setting out a roadmap for further improvements over the next 2 years.”
We bet you’re jealous of your employees as they troop out of the door to take their lunch hour. Can you even remember the last time you had a lunch hour? We’re on the side of business owners. We know you’ve probably still got your nose to the grindstone at 10pm.
Tax doesn’t have to be taxing? Well sometimes it is. Luckily, we’re here to help. RIFT Research is here to help you claim your R&D tax relief without you having to lift a finger.
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