In the United Kingdom, you can find world-class graduates and young academics. You also benefit from an excellent range of highly qualified employees. Our Grand Challenges are one of our numerous innovation initiatives. These bring the best minds from science and business together to examine global trends of the 21st century and identify opportunities that arise from them.
One of the UK’s great strengths is its ability to come up with new ideas, from jet engines to bag-less vacuums to MRI scanners and the Internet.
The talent, funding, and tax incentives available in the UK, as well as the business infrastructure, help create an innovative environment for business. With our commitment to first-class research and development, we support your company in reaching its full potential.
The tax incentive of the UK is known as Research and Development (R&D) Tax Credit. The main purpose of it is to inspire more companies to invest in R&D.
A customer can claim their cash credits and can also reduce the tax on the bill:
This system was generally built in the year 2000 for small-sized or medium-sized companies. And for large companies, another system was made.
The Research and Development (R&D) Tax Credit is known to be an outstanding opportunity for all kinds of businesses to decrease their Federal and State tax liability. Many different companies of the different niches are eligible for tax savings and therefore, can easily hire new employees, can give more time for launching new products, and so on.
Since there is a large expansion and several changes have been made, many companies are receiving benefits. Any kind of business that is in the stage of progressing, designing any kind of products, software, can claim their Research and Development (R&D) Tax Credit by paying the tax.
This was generally introduced a long time ago. The motive behind this system was to increase employment in technical fields by inspiring different businesses to invest in extraordinary innovations.
There are many eligibility criteria for your business or company to qualify for Research and Development (R&D) Tax Credit.
- 1. The business originates the latest products or procedures.
- 2. Modifies the products or procedure that already exists.
- 3. Develops or progresses upon existing prototypes and products.
If your business qualifies the above criteria, then you become eligible for R&D Tax Credits. UK is one of the most innovative countries in the world – as ranked 4th in the Global Innovation Index 2018 as the best-placed economy of the G7 / G20 countries.
The UK government provides generous financial support and tax incentives for innovation in the UK. This includes: Funded by UK Research and Innovation (UKRI) through Research Councils and Innovate the UK, Research grant tax incentives such as Patent Box, R&D Tax Relief, and R&D Expenditure Credit on R&D expenses, and many more.
To Calculate R&D Tax Credits, it is essential to determine whether your business falls under the category of SME’s/Large companies or RDEC.
Almost every other company fits into the SME category. SME is a kind of category in which the business consists of not more than 500 staff and either has revenue of less than £100m or balance sheet assets of £86m or less than that.
The Benefits of SMEs can be gained by only the companies that fall under this category. The rate of relief of SMEs can be very high and can be up to 230%. If a company is in the phase of loss-making then some of the losses can be surrendered for payable cash credits.
A large company is the kind of business having more than 500 staff or less than 500 staff however having a revenue which is greater than €100m or balance sheet assets which is greater than €86m.
To determine the rate of R&D tax credits, it is important to know whether your company is making profits or losses.
- If your business is making profits, then your corporation bill is reduced by R&D tax credits and the rate of relief your business will get is 25%. For example, if the R&D that your business spending is £100,000, then the reduction in the tax bill can be around £25,000.
- If your business is making losses, you can’t offset the tax liability due to which, you will receive your tax credits in cash and the rate of relief your business will get is 33%. For example, if R&D that your business spending is £100,000, then the company can get credits in cash up to around £33,000.
The next category is The RDEC Scheme. The Research and Development Expenditure Credit (RDEC) scheme is initiated for the large company scheme that has claimed any R&D expenditure. It allows SME’s and large companies to claim under RDEC to get cash sums that are payable if it is a loss-making company or an offset of tax payable if the company is making profits.
The claim of RDEC can be paid as a taxable credit of 13% of your total R&D expenditure. And since it is taxable, you can get 11 % of the cash benefit after the tax.
This cost can be an offset that is against your tax bill. And if there is no tax to pay, you can get the total amount in cash. For example, if your business spends a total of £100,000 expenditure last year, you can either get a cash credit of £11,000 or your tax bill can be reduced by £11,000.
Your R&D tax credits usually depend upon many factors. Mainly it depends on how you determine and documenting the qualifying costs.
These generally include the salary that is paid to all the employees, the number of resources that are used to develop the product or process, any expenses paid to a third party for researching, and many more.
The best part is that if you are working on any product or process, it doesn’t need to be successful; you can get your claim even if it is a loss-making product or process.
If you want to apply for R&D Tax Credits, do not hesitate to contact us. At Grantly, we help businesses to claim their R&D tax credits. However, unlike many other websites you see on the Internet related to R&D, we do not offer R&D tax credits ourselves instead, we connect our customers to the best R&D tax relief advisors.
We will connect you with our reliable and honest R&D advisors. Our services are 100% Free for businesses seeking R&D tax credits!
We simply charge our partner R&D advisors a percentage of the fee that they charge you after a successful claim.