Over 50,000 SMEs in the UK have claimed research and development tax relief in the past year, far from the £6billion budget currently set aside by the government, who have committed an increase to this to be 2.4% of UK GDP by 2027.
So, we know the relief is available and there are funds to pay it – but who is eligible? For a business to qualify for SME R&D tax relief, it must have less than 500 employees and a turnover of less than £86million. Businesses can claim relief equivalent to 130% of qualifying expenditure. If the business incurs a trading loss in the period in which R&D tax relief has been claimed, it can surrender all or part of that loss for a tax credit of 14.5% – vital cash for a business.
Why should businesses take advantage of this tax relief?
Many businesses remain unaware of this possibility, which can be a great opportunity to fuel (and more importantly fund) innovation. The government wants to use businesses’ tax allowances to invest in technology and science projects, and even if the project is unsuccessful, the claim will likely still be valid. It is part of the government’s push to help the UK remain a competitive location for new technologies and research.
There are lots of grants and schemes that come and go, it is hard to keep track of what is available. A good place to look for an R&D grant is the innovation funding service which you can find on the GOV.UK website – there is currently the Innovate UK Smart Grants: August 2021.
We know that innovation is important in any economy and can be highly beneficial for businesses too – it’s a good way to keep current and keep making a profit. We are always happy to discuss any of your business needs, including R&D tax allowances, please contact your local AIMS accountant to find out more information.