8 Reasons Why R&D Is So Beneficial For SMEs
Claims can be worth thousands of pounds - don’t miss out!
It’s tough out there and COVID-19 uncertainty continues to bite. Many businesses are simply trying to keep their heads above water, making any thought of future growth seem far away. Even for those businesses that are doing well, the costs of research and development can be prohibitively expensive.
However, R&D doesn’t have to be a long and expensive process. In fact, the benefits in terms of increased revenue and competitiveness can be immediate.
What is research and development (R&D)?
Say the words “research and development” and most people think of super-clever technical bods working day and night on the latest app, or laboratory workers looking for cutting edge treatments for coronavirus. Of course that would be right - those things would certainly count as R&D - but in fact it’s a huge blanket term that covers all sorts of projects across just about every industry.
For instance, for food retailers R&D might be about developing more sustainable food packaging or working on new recipes that improve shelf like. Manufacturers might make engine parts that are cheaper and more robust, or engineers may design building materials that withstand earthquakes better than ever. Even the smallest of projects can come under the umbrella of R&D.
So what are the benefits of R&D to small businesses?
There are loads of reasons why R&D is essential to small businesses - here we’ve picked out eight of the best:
1. Boosted income
Successful R&D projects that mean new and improved products, process and services can substantially boost your bottom line. Not only are you likely to make more profit, but a strong programme of R&D can also be attractive to new investors.
2. A unique selling point (USP)
Whether your R&D project results in something totally new or something that simply better than previous iterations, it’s the chance to gain a competitive edge. R&D essentially helps your business stand out and offer something no-one else does.
3. Increased funding
Ok, so we know that R&D can be expensive. But it also brings about opportunities for businesses to access various local and international R&D grants, as well as public sector funding and R&D Tax Credits. All of these can help massively with the costs.
4. The chance to collaborate with others
The success of most R&D projects hinges on collaboration with others, whether this be with fellow businesses in the sector or with academia. It allows for employees involved in the project to network, gaining new skills and knowledge and the opportunity to share resources.
5. Moving or expanding premises
Larger R&D projects tend to require more space and better - or different - facilities. Some firms may need to branch out and take on extra warehouses or manufacturing space, whilst others might up sticks and move somewhere else together. This in turn involves considering the company’s current premises in detail, potentially cutting costs if the rent on a new site is cheaper for example. Larger, better equipped sites may also contain more modern machinery, again potentially aiding efficiency.
6. A competitive edge
Continuing on with the idea of having a USP, R&D work can offer your business a wider competitive advantage, allowing your business to establish itself at a market leader. By developing new products and services, your business can also gain new intellectual property which could bring additional financial benefits. This too can bring tax advantages in relation to the Patent Box.
7. Tax relief
We’ve mentioned R&D Tax Credits already, but this is something we can’t hammer home enough: if you’ve recently completed any projects that make any advancement in science or technology then R&D Tax Credits may be claimable. More detail can be found below, and we also strongly recommend having a look at our R&D Tax Credits page for more information.
8. Enhancing your reputation
The more R&D your business undertakes, the more likely it is to gain a reputation for being forward-thinking and creating. Businesses that don’t engage fully with innovative new projects are likely to stagnate, which won’t do your brand any favours. In fact you run the risk of fading into the background.
How can I fund research and development?
If you’re looking for cash to get your R&D project off the starting blocks, luckily there’s a range of tax incentives, loans, grants and other funding options available.
The R&D Tax Credits scheme is one of them, designed as an incentive for small businesses in particular to invest money in growth and innovation. It works by reimbursing businesses with a proportion of their R&D expenditure, either as a Corporation Tax reduction or a lump sum credit. A huge range of projects and costs are eligible, as you can see in our recent blog: What Costs Can You Claim Through R&D Tax Credits?
There are other funding options too, including angel investors and crowdfunding, plus a range R&D grants including those offered by Innovate UK, Horizon 2020 and EUREKA Eurostars. We’d be happy to discuss these options with you, and help you make a winning application. Feel free to get in touch with our expert team.
Why use the Tax Cloud?
Tax Cloud is an online portal that means UK businesses can work through their R&D Tax Credit claim with expert support on hand. It’s free to sign up - simply log on, input your own figures and complete your calculations to see what you can claim. The portal also allows you create an accurate, professional narrative about your project that will stand up to HMRC scrutiny. Plus, before your claim is submitted, our specialist R&D team will review it all for you to make sure it’s fully maximised so there’s no risk of over or under claiming. At any stage, when you use the Tax Cloud portal we will be pleased to offer constructive criticism and feedback. And of course, if HMRC have any questions or enquiries, we can work with you on those too.
Got a question or just need some advice? Simply call us on 0207 360 4437 or use our contact page and we'll be pleased to get back to you. Or of course why not sign up to the Tax Cloud portal for businesses today and get your claim started.
- Submitting R&D tax claims since 2001
- Strong track record spanning 20+ years delivering R&D tax credit claims
- Over £70m claimed and counting
- Industry leading specialists
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