Are you getting the credit you deserve?
Innovation and growth should go hand in hand. If you are investing time and resources into innovation are you making sure you reap the (tax) benefits?
Research and Development (R&D) tax credits are government incentives aimed at encouraging innovation and technological advancements. They work by providing tax incentives or credits to businesses that invest in qualifying R&D activities.
We spoke to SHS’s Inhouse Legal Counsel, Anthea Nelson who shared her insight around the subject.
Qualifying Activities - R&D activities that involve innovation, experimentation, or technological advancements. These activities must meet specific criteria set by the government, typically focused on solving technological or scientific uncertainties.
Expense Deductions or Tax Credits - Businesses can either deduct eligible R&D from the Corporation Tax bill or receive cash benefit.
Eligibility Criteria - You need to meet certain criteria to qualify for these incentives. These criteria often include the novelty of the project, the technical uncertainties involved, and the efforts made to resolve these uncertainties through research and experimentation.
Claiming the Credits - You will need to document and substantiate their R&D expenditures. This documentation might include project descriptions, technical documentation, financial records, and other supporting evidence. These claims are usually filed along with the company's tax return.
Government Approval Tax authorities review the R&D activities and expenses claimed to ensure they meet the specified criteria. Once approved, the company receives the benefit in the form of reduced corporation tax or a cash benefit.
These incentives exist to foster innovation by reducing the financial burden of R&D expenses, ultimately encouraging companies to invest more in research and development so if you are making these investments, make sure you see the reward.
If you need further guidance on R&D, H&M Revenues and Customs has a helpful section on the website outlining the scheme in much more detail. You can access full details here.
