Driving Innovation: How to save money on R&D
‘August is R&D month’ and to celebrate our latest guest blog is from is from Catax, the Research & Development tax relief specialists who have rewarded over £307 million pounds in tax relief to their clients.
The UK has always been at the forefront of driving global innovation. From the steam engine through to uncovering the positive impact Dexamethasone has for COVID-19 patients.
As the impacts of lockdown measures continue to unfold, businesses around the UK are focusing on cash flow. The government has been refining the process of accessing grant and loan schemes, with new announcements published weekly, and while this funding is essential for the economy, many owners of SMEs feel they will not be able to cope with the level of debt this could incur once the crisis measures are lifted. As lockdown measures ease, the country is balancing between opening our businesses back up and carefully maintaining a decreasing infection rate.
In looking to protect businesses, utilising unclaimed and readily available tax relief is an effective way to get a cash injection into a business without incurring debt. Several tax relief schemes are already in place, with HMRC continuing to drive through claims during the pandemic.
Research & Development tax relief was a major highlight of the budget announcements on March 11th 2020, with the Chancellor releasing plans to increase public R&D investment to £22bn per year by 2024-25. For qualifying companies, this tax relief is money claimed back for work you have already done, and money already spent.
The UK government is looking to increase R&D expenditure as a % of GDP over the next decade from 1.7% in 2016 to 2.4% in 2027. This illustrates the commitment to ensuring companies are continuing to invest by being given the appropriate reliefs for developing innovations within their sector.
UK industry is filled to the brim with innovation. With companies continually trying to find ways to make businesses more efficient, safer, more cost-effective and more environmentally friendly, it is more than likely that they will be eligible to claim R&D tax relief.
Some examples of activities that would be eligible include:-
- Development and implementation of new software programs
- Development of sustainable technology
- Development of tools and processes to improve efficiency
- Creation of new materials
- Developing new and job-specific methods of safe working procedures
If your company has been trading for more than 12 months and have developed new, or improved existing products, processes, systems, services, devices or materials, then there is a significant chance you will be eligible to claim Research & Development Tax Relief, and irrespective of whether your company is currently making a profit or operating at a loss, a claim can still be possible.
While you cannot claim for off the shelf ‘bespoke’ software, or simple tweaks to methods and products already used in the industry, you might be surprised by what is eligible.
Other companies have received significant benefits for a wide array of innovation, including:-
- Redeveloping and consolidating legacy system modules advancing their dialler platform capabilities (tax benefit of over £63,000)
- Development of bespoke CRM systems, tailored to automatically match up vacancies with candidates for recruitment firms (tax benefit of over £88,000)
- Development of HR software that allows clients to manage their staff, including timesheets, payments, sick leave and holidays automatically while ensuring all data protection standards are met (tax benefit of over £102,000)
- Modification of hardware and software of leased machinery to fit seamlessly with client’s legacy systems (tax benefit of over £67,000)
- Development of e-commerce platforms with future proof calculation algorithms (tax benefit of over £79,000)
If you want to learn more, Catax are hosting a webinar ‘Driving Innovation: How do you find your Business Growth?’ in collaboration with the PNE team on Friday 28th August: Sign up now >