R&D tax relief for small and medium sized businesses
February 19, 2013
Is your business missing out on one of the most valuable tax reliefs currently available to UK companies?Companies in the North West are still not taking full advantage of the research and development tax reliefs available where they are carrying out qualifying projects.
Over recent years the government has substantially increased the tax reliefs available to UK companies who are carrying out research and development.Since 1 April 2012 Companies which are classified as either small or medium sized that are carrying out their own R&D are entitled to claim a super-deduction against their taxable profits equivalent to an extra 125% of the actual qualifying expenditure which is incurred.This can result in greatly reduced corporation tax liabilities or, if the company is loss making for tax purposes, a cash tax credit paid to the company by HM Revenue & Customs.
R&D for tax purposes occurs when a company undertakes a project which seeks to achieve an advance in science or technology.For these purposes the definition of science and technology is very broadly drawn and includes, for example, various disciplines of engineering, software development, and food technology as well as the ‘pure’ areas of science such as physics, chemistry, biology and their sub-disciplines.The success of Chiks’s R&D team is in part based on our ability to identify R&D in businesses that have not previously considered their activities to include R&D.
Our R&D team can also offer bespoke remuneration modelling for an owner managed business which carries out R&D.The normal analysis of salary versus dividend tax planning can break down when R&D activities are taken into account meaning that the fine tuning of a company’s remuneration strategy can offer further tax savings for the owner-manager.
If your business includes the development of new or improved products or processes which include an element of technical innovation then you should be considering the R&D tax relief.
If you would like any further information please contact Tony Medcalf on 01772 821021.