It’s an important deadline because if you are an innovative business and are not aware of the government’s research and development (R&D) tax incentive before then, you could be literally throwing away thousands.
R&D tax credits are a government incentive to encourage innovation amongst UK companies. Many businesses who do claim receive on average £50,000+ a year in the form of a cash repayment and/or corporation tax reduction. A profitable business can recoup up to 25p for every £1 spent on qualifying activities and a loss-making business up to 33p in every £1. To find out more, read our R&D tax credit explained page.
Claim for the previous two years
You have two years from the end of your accounting period to submit an R&D tax credit for qualifying expenditure you’ve incurred in that period. So once you hit the deadline at midnight on 31 March 2017, you can no longer recoup the money you spent on qualifying activities between 1 April 2014 and 31 March 2015.
Who’s missing out?
We commissioned a report, A Nation of Innovators, to take a closer look at this issue. We found that although 89% of the companies we surveyed planned to innovate in the next three years, only 40% of them were planning to claim tax credits for their work. Even accounting for those businesses that might not be eligible, these figures give a useful measure of how many businesses might be missing out on R&D tax credits. Although more SMEs than ever are claiming (42,075, according to the latest HMRC R&D tax credit statistics), there are still many businesses who stand to benefit.
If your company is taking a risk by improving or developing a process, product or service then you could qualify for the R&D tax credit incentives. We recapped the essential eligibility criteria in a recent blog, but it is important to remember that profitable as well as loss-making businesses are able to claim under the scheme. You can even claim for a project undertaken on behalf of a client. And if you’ve received a grant, the exact treatment of your R&D tax credit calculation will depend on the nature of the funding you’ve received, but you may still be eligible.
The deadline is looming
It’s not too late to act, but time is now running out. If you are an innovative business and still haven’t claimed R&D tax relief for your period ending 31 March 2015, then speak to us to see just how much this valuable benefit could be worth to your company.
At ForrestBrown we advise more than 100 innovative businesses across all sectors each month. And many of them had no idea they could claim R&D tax credits until they spoke to us! If you think your business may be involved in qualifying work, speak to our chartered tax team on 0117 926 9022 and we can help you reap the many benefits of an R&D tax claim.