Budget 2014 introduced new measures affecting loss making SMEs undertaking research and development activities. Group Tax Director Gill Molloy explains how businesses could now recover up to 32.6% of costs.
Loss making SMEs with no corporation tax liability could be eligible for a cash payment, known as a “Research & Development (R&D) Tax Credit”.
In this year’s Budget, an increase to the R&D Tax Credit rate was announced, meaning loss making SMEs undertaking R&D activities can now claim a cash sum of up to 32.6% of qualifying expenditure. The increase took effect from 1 April 2014.
Aside from making this relief significantly more valuable, the increase has provided further incentive for SMEs to invest in R&D and will be particularly beneficial to small, innovative, high risk, high growth companies.
Is my business undertaking R&D?
Some common misconceptions surrounding R&D Tax Credits is that they are only relevant to companies who are developing something completely new from scratch, or only companies operating in industries such a biotechnology, software and pharmaceutical.
However, as many businesses are unknowingly undertaking projects which meet HMRCs definition of R&D, you should consider the following questions:
- Are you problem solving within your business?
- Have you fixed a problem and if so, was the solution unique?
- Have you developed a process or product that already exists in the industry but the information to resolve the “technical uncertainty” was not readily available to you?
- Have you had a machine designed which is specific to your business and that uniquely solved a production issue?
- Have equipment developments improved your products or processes to make them faster or more cost effective?
If you think you may qualify for R&D relief and would like to discuss things further, please contact Gill Molloy on 0161 703 2500 or e-mail firstname.lastname@example.org