The beauty of R&D claims is that if you are already incurring the costs as a company, the mere fact that a claim is successful, means that your company is given a boost in terms of increasing your tax deductions. For every £100 your company already spends on R&D, you will get a tax deduction of £230 - it really is that simple!
The latest HMRC-produced statistics regarding R&D claims made by UK companies are very encouraging. The average R&D claim made by Small and Medium Enterprise companies is £55,000! What does this actually mean? This could be a £11,000 reduction in the company corporation tax bill if the company was profitable, or it could even mean a possible £7,975 payment from HMRC if the company were loss making! Both of these scenarios are good options, and certainly something worth pursuing for any company.
Companies with registered offices in the South West make an average claim of £54,000, so that is almost the same as the national average. However, only 8% of the total UK R&D claims made are coming from companies based in the South West - this number can surely be improved?
So, who can claim R&D? Any company developing new products, services or systems or any company materially improving existing products, services or systems could potentially be able to make a claim for R&D. If you believe your company could fall into either of these categories, please consider a R&D claim. Just because your company accounts do not have a ledger account labelled - "R&D", don't assume that it wouldn't qualify for these generous tax benefits. You may be surprised to know how often R&D is hiding in plain sight as it were.
Are there any deadlines I need to be aware of? Yes - a company has two years from the end of the financial year within which to make a claim to HMRC.
Please consider Research and Development at your next monthly management meeting - the benefits could be significant to your business!