R&D Tax Credits: Are You Missing Out?
Published 25 February 2021
Are you one of the 95% of eligible businesses leaving money on the table? Listen up and pay close attention.
Many of the businesses that we work with don’t understand what counts as eligible R&D activity – and yet they’re part of the 5% who are successfully submitting a claim. That’s ok though – that’s what we’re they’re for. But it got us thinking: how can we help the other 95% that are missing out?
We’re on a mission to help educate the business community on what counts as eligible activity and educating you on who can apply for R&D tax relief (whilst helping to debug some myths along the way). If you’re not a business owner, it’s still worth joining us for the journey; with our lucrative partner scheme, you can be rewarded for helping UK businesses in your network.
Read on to discover more about claiming research and development tax reliefs, why you should stop neglecting R&D tax relief, and how to make it your superpower as we head deeper into 2021.
What counts as eligible R&D activity?
HMRC reports that only 5% of eligible firms claim R&D tax credits, likely due to misconception of what counts as eligible activity. This has led to many businesses across many industries missing out on the government scheme designed to support them.
Many business owners believe that R&D is all about highly technical and scientific innovations. Or that a business must have a dedicated R&D division to qualify. But that’s not true.
In fact, you may be surprised to discover that the only real requirement for R&D tax relief is that you’re actively seeking new and efficient ways to tackle challenges and drive innovation within your industry, regardless of what that industry is.
Who is eligible for R&D activity?
There are two R&D schemes - the SME R&D tax credit scheme and the Research and Development Expenditure (RDEC) scheme. This ensures enterprises and SMEs can apply for R&D tax relief and means that size doesn’t matter.
Even companies that are making a loss can apply! Moreover, loss-making SME’s can also decide not to carry R&D loss forward or backward against their profits. An R&D tax consultant will take into account your company’s future and past tax positioning to maximise the benefits of claiming research and development tax reliefs.
You can learn more about how the R&D schemes work in our R&D FAQ.
The core benefits of R&D Tax Relief
By now, you should have established your business’ potential eligibility. But, eligibility aside, why would you want to proceed with a claim? Let’s take a look at how claiming research and development tax reliefs can benefit your business.
Use R&D as a strategic tool
Savvy businesses use R&D tax credits to grow their business in exciting ways. For example, often the money is put towards building new services and products, unlocking extra revenue and expanding their customer base.
Other ways R&D tax credits can be used for growth include:
- Hiring new employees
- Developing free tools for customers
- Investing in office space
- Funding marketing
- Funding employee rewards.
Whatever your vision for the future, R&D tax credits are a viable tool for strategic growth.
Stay ahead of the competition
A universal challenge for businesses across all industries is staying ahead of the competition. We live in such a large, busy world, and every day new businesses are popping up offering services similar to yours.
But this shouldn’t dishearten you. Instead, it should make you wonder, What can I do to make my business unique?
Enter R&D tax credits. As we already discussed, they can help you design and build innovative products and services your customers can’t get anywhere else.
Plus, simply investing in R&D sets you apart as an innovator. All you need to do is show the world how you’re pioneering in your industry. From there, you can build an exciting, distinct brand that puts you ahead of the competition.
Spark new opportunities
With R&D innovation comes exciting opportunities to work alongside other industry pioneers, create new jobs within your business and expand your offering. All of which can help you achieve your future goals.
Investing in R&D also helps to boost the UK economy. This in turn will generate new opportunities within your industry, opening up new avenues and markets you may have never considered before.
Drive innovation with confidence
Many business owners are put off the idea of investing in R&D because of the expense. But what if you could recover enough money to not only pay for the work but fund future projects?
Thing is, that’s the whole point of the R&D scheme. The government wants to reward you for being a pioneer. So you feel incentivised to conduct ground-breaking research and build better products and services that benefit your industry.
In the construction sector alone, the average R&D tax claim is £123k. Just think about all the exciting innovations you and your team could pursue with that kind of money!
Improve your cash flow
R&D tax credits can be used as a tool to improve your cash flow in the long-term, supplementing your income powerfully.
This can be especially useful for SMEs in this unpredictable world we live in. CBILS, waiving vat, bounce back loans – it’s all just kicking the can down the road. R&D is much more powerful, essentially unlocking equity out of your last two years’ costs.
In other words, it can act as an essential lifeline during difficult times. And by continually investing in R&D, you can rely on R&D tax credits as a consistent revenue stream.
Is it worth my time?
In short, the answer is yes. But don’t take our word for it. Here are a few things that our clients have said about us:
“It was a professional and efficient process. Our fears about it being time-consuming and complicated were unfounded,” one client shared of our process.
Another continues: “Recoup showed us how the R&D tax relief scheme is a valuable source of incentive… The ROI on the hours and money spent on our R&D initiatives was exceptionally good.”
“In the end, I only had to dedicate two hours of my time.”
“Recoup launches straight into action, getting things done efficiently without eating into your time. You don’t have to worry about the process, there’s nothing complicated or difficult about it…Recoup makes it all unbelievably simple.”
To continue reading what our clients have to say about us, check out our case studies.
What are my next steps?
Think you can benefit from an R&D tax claim? Use our R&D eligibility checker to find out if you qualify or call us directly on 0800 3277514.
Alternatively, if you’d like to explore the benefits of our thriving partner network, check out our R&D blog.
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