Thinking about research and development (R&D), usually people in white lab coats will spring to mind. But R&D tax relief isn’t just limited to companies doing work in laboratories.
R&D is also carried out by individuals who don’t have multimillion pound budgets to work with.
It is often a part of daily problem solving that is characteristic of most businesses. In reality, many businesses are seeking advances in science or technology in their day to day work, from engineering companies and software developers to food production companies.
There’s likely to be an element of your companies work that counts as R&D too. Many of the companies we speak to don’t realise that they qualify for R&D tax credits or are not claiming their full entitlement. In fact, many businesses haven’t even considered R&D Tax relief as an option. This could be a costly mistake as thousands of pounds of R&D tax relief are at stake. If your company is taking a risk by innovating, improving, or developing a product, process or service, then you could qualify for R&D tax credits.
Here are some examples of R&D which don’t quite fit the white lab coat mould but are likely to qualify for R&D tax relief:-
You can often claim tax credits on bespoke and one-off manufacturing projects because of the problems that arise when creating one-off items. If the customer asks you for something totally different then the chances are some of your costs will qualify for R&D. Any of the following processes could qualify for R&D tax credits:- Product development using CAD tools, designing and developing cost-effective and innovative operational processes, designing, constructing and testing product prototypes, developing processes to meet increasing regulatory requirements, streamlining manufacturing processes through automation.
Software is increasingly at the centre of driving organisational efficiencies. Many SME’s develop software to help solve the challenges they face, and whether this is handled internally or outsourced, the work can still qualify for tax relief. Any of the following processes could count as R&D:-
Adapting systems to improve performance, redesigning systems using different technologies or programming languages, integration of complex or obsolete legacy systems, extending functionality of an operating system, integrating a hardware and software platform, amending or adapting the original code of a Content Management System.
The truth is many companies don’t realise that the work they do is R&D and therefore don’t take advantage of the benefits available. To find out if you qualify for R&D tax credits get in touch.