Why Are SME’s Missing Out On R&D Tax Relief
Businesses are currently missing out on thousands of pounds when it comes to R&D Tax Relief, in particular SMEs. Innovation is at the heart of growing businesses, and failed innovations through R&D are still eligible for tax relief, which gives extra capital that can be reinvested through R&D as well as Patent Box tax credits.
These two forms of government tax relief have been designed to reward and encourage innovative behavior in businesses and can amount to thousands of pounds each year, which some businesses fail to claim back on. In turn this can have a knock on effect on innovation, and in some drastic cases affect the business being cash rich as they are not claiming for R&D tax relief.
Who is eligble for R&D tax credits:
Despite having a lot of capital, there are a number of reasons why SMEs are failing to claim this relief:
- Businesses do not realise they are eligible
- They do not know how to make a tax claim, therefore avoid it
- Some do not even know it exists
- Worry that the process will be time consuming, lack of resources etc.
With a lot of SMEs, often there is a lack of commercial experience that means that ignorance towards this tax relief is more apparent. R&D tax relief was introduced by the government in 2000 and was put in place to reward and encourage innovation by British companies. It has been an outdated assumption that R&D tax relief only applies to scientists, when in reality it can be applied to almost any sector, from engineering to gaming.
Where there is not a lot of coverage on this kind of tax relief, it means that business owners are having to educate themselves on the avenues that they can go down to ensure that they are not losing money on this area of business.
The average R&D tax credit relief claim comes in at £54,000 per year, per business so it is crucial that if you are reading this, you check your eligibility
What to do if you qualify for R&D tax credits:
If you realise that you are eligible for a claim, there are two options that you can take. Firstly, you can make a claim yourself internally. This is something that can often be time consuming and confusing especially if it is the first time making this type of claim. The second option would be to go with a trusted partner who specialises in these types of claims to ensure a smooth process and will only take 2-3 hours of your time.
Have a look at www.taxcloud.co.uk for more information.
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