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Updates from the Clayton & Brewill team.

R&D Tax Credits – no lab coat required

29th June, 2015

If your company has invested in process and product improvement or development you could make substantial reductions in your corporation tax bill through HMRC's R&D Tax Credit scheme.  Doug Perry of Nottingham and Long Eaton chartered accountants Clayton & Brewill explains how.

Doug Perry Clayton & BrewillThe government introduced R&D Tax Credits to reward companies that innovate, recognising that achieving a competitive advantage is an expensive business.

A successful claim for research and development relief can be a vital boost to an SME's cash-flow and can be claimed against employee costs, staff provider costs, physical materials, software, and some utilities.

Many business owners however are missing out simply because they don't realise that they are eligible. We regularly help clients to reduce their tax bill by making successful applications for R&D tax relief – and it isn't just something for scientists and high-tech researchers.

Manufacturers, engineers, software developers, textiles companies

If you are spending money on new products, processes or services or can demonstrate that you have substantively improved an existing solution then you could be eligible for tax relief of 225% on your expenditure on research and development. In other words, for each £100 of qualifying costs, your corporation tax profits could be reduced by an additional £125 on top of the £100 spent on the R&D.

A boost for loss-making SMEs

In 2014, the Chancellor announced an increase in the rate of R&D tax credit payable to loss-making SMEs from 11% to 14.5%.

This means that a business spending £100,000 on research and development activity will be able to recover £32,625 from HMRC.

This change seems to be firmly aimed at innovative, early stage and small companies that are yet to see a payback from their research and development activities, as part of the Government's aim to reward the 'makers and the doers'.

R&D Tax Credit claims are made as part of the Corporation Tax return – either at the time of the return or as an amended return, and HMRC allows claims to be made up to two years after the end of a Corporation Tax period.

To find out if your business might be eligible to apply for R&D Tax Credits, call Clayton & Brewill on 0115 950 3044 or drop us an email and we can help you through the process.

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