{"id":9904,"date":"2014-06-18T00:00:00","date_gmt":"2014-06-17T23:00:00","guid":{"rendered":"https:\/\/www.processindustryforum.com\/2014\/06\/18\/research-development-pays-engineering-manufacturing-companies\/"},"modified":"2014-06-18T00:00:00","modified_gmt":"2014-06-17T23:00:00","slug":"research-development-pays-engineering-manufacturing-companies","status":"publish","type":"post","link":"https:\/\/www.processindustryforum.com\/hot-topics\/research-development-pays-engineering-manufacturing-companies","title":{"rendered":"Research and Development pays off for engineering and manufacturing companies"},"content":{"rendered":"
Research and Development really pays. We mean that in a literal sense because did you know that many UK based Process Industry businesses could be in line for R&D tax relief? Read on to find out how.<\/p>\n
Research and Development Relief is a Corporation Tax relief that might just help to slash your company’s tax bill. Or if you’re an SME (more about the qualifying criteria later) you can claim a cash lump sum in the form of a tax credit. As long as you’re liable to pay Corporation Tax, there’s a possibility of claiming a welcome windfall.<\/p>\n
There are two schemes for claiming relief, depending on the size of the company:<\/p>\n
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The Small and Medium-sized Enterprise Scheme has higher rates of relief according to HM Revenue and Customs (HMRC)<\/a>. They say, \u201cFrom 1 April 2012, the tax relief on allowable R&D costs is 225% – that is, for each \u00a3100 of qualifying costs, your company or organisation could have the income on which CT is paid reduced by an additional \u00a3125 on top of the \u00a3100 spent. It also includes a payable credit in some circumstances.\u201d<\/p>\n It’s worth noting that you can only claim under the scheme for SMEs if your company meets the definition of an SME for R&D Relief purposes.<\/p>\n You might be surprised to learn that HMRC defines an SME as a company with fewer than 500 employees and either of the following:<\/p>\n You may not be considered to be an SME if you form part of a larger enterprise. You’ll need to mention any company with a 25% stake in your business. Similarly, you’ll have to declare any shareholdings you might have in another organisation.<\/p>\n <\/p>\n The annual \u00a310,000 qualifying R&D costs have been removed for accounting periods ending on or after 1 April 2012. According to HMRC, \u201cFrom 1 April 2008, the tax relief on allowable R&D costs is 130% – that is, for each \u00a3100 of qualifying costs, your company or organisation could have the income on which CT is paid reduced by an additional \u00a330 on top of the \u00a3100 spent.\u201d<\/p>\n Ok here’s the rub. You can only claim R&D Relief if a project<\/p>\n \u201cseeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability.\u201d<\/p><\/blockquote>\n So large-scale advancements rather than incremental gains.<\/p>\n If your company and project both meet the criteria, you can claim tax relief on revenue expenditure. \u201cGenerally, this means costs incurred in the day-to-day running of the business – not capital expenditure on assets,\u201d say HMRC.<\/p>\n This can include:<\/p>\n For more information visit the HMRC<\/a> website.<\/p>\n","protected":false},"excerpt":{"rendered":" Research and Development really pays. We mean that in a literal sense because did you know that many UK based […]<\/p>\nWhat is an SME for R&D Relief purposes?<\/h3>\n
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The Large Company Scheme<\/h3>\n
Which R&D projects might qualify for Relief?<\/h3>\n
Costs that qualify for R&D Relief<\/h3>\n
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