24TH MAY, 2019

How SMEs Can Benefit from R&D Tax Credits

Research and Development is a valuable tool that most firms use to gain a competitive advantage over their rivals. In 2000, HMRC introduced an R&D Tax Credits scheme to encourage businesses in the UK to pursue more projects which can promote knowledge in science and technology. As an SME, here are some of the ways that you can leverage R&D Tax Credits to bring your innovative ideas to life.

Helps with Cash Flow

R&D Tax Credits are a government incentive that serve as tax relief. A reduced tax bill means there’s extra cash for your company which you can invest in other areas within your business. For instance, you can invest in technology, new staff, machinery or further training of staff. The investment from the extra cash will not only create more efficiency, but also generate more profits down the line.

A Quick Way of Securing Funds

Let’s face it, the process of trying to secure funding for your project can be lengthy and a drawn-out one. Regardless of the route you use, be it traditional or campaigns, it can take you months to secure funding for your project. On the flip side, with R&D tax credits, you can have cash in your company’s bank account within two months of first getting in touch.

Makes it possible to Extend the Timeframe of Funding

The quick funding by the R&D tax credits scheme is capable of putting your company in good stead with regard to other types of financing and investment. As an SME, R&D tax credits offer you the freedom to delay a given round of funding as it would be more profitable at a later date. Most firms usually have time-bound factors when it comes to financing. Some companies may have a gap of at least twelve months between funding rounds. However, R&D tax credits allow SMEs not to be as desperate as they may have been without the extra cash flow.

Attracts Investment

Many SMEs find it hard to attract investment. As such, when it comes to securing investment, you have to make the best of every opportunity you come across. Investors will only be willing to work with a company that has invested in the future of its industry. When SMEs receive R&D tax credits, they’re proving to the investors that they’re putting time and money aside to develop a particular area of the business - something any investor would be pleased to hear.

To sum up, if you have an innovative idea for a new process, product or service and have no clue where to begin, you may find this article useful. Similarly, you can give your SME a competitive edge by taking advantage of online platforms such as Tax Cloud, which makes the claiming process faster and easier.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad Associates helps businesses maximise tax reliefs and secure R&D grant funds. We specialise in R&D Tax Credits, Video Games Tax Relief, Innovate UK grants, Horizons 2020 grants, and Research and Development Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • 100% success rate
  • Over £100m claimed and counting
  • Industry leading specialists
  • In-house technical, costing and tax experts
  • Member of the Research and Development Consultative (RDCC) committee

Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey David Farbey MA, FISTC, FRSA Technical Consultancy Director
Deborah Chapple Deborah Chapple ATT Corporate Tax Director
Lauren Olson Lauren Olson MA, MISTC Senior Technical Consultant