With lockdown gradually easing, businesses around the region hope this marks a return to ‘normal’ trading (or a ‘new normal’).
At the same time, many companies are counting the cost of the pandemic and are keen to explore all areas of support available to them.
Support through R&D tax relief
Post-Budget, R&D remains an important part of the UK’s recovery plan, with the Government keen to increase investment in R&D. This is great news for companies looking for additional support, as accessing R&D tax relief can be a quick, efficient way to get cash back into your company.
R&D tax relief works by reducing corporation tax liabilities, generating tax refunds from previous years, or creating payable tax credits from HMRC.
Companies may benefit from corporation tax relief of almost 25% of qualifying costs, which will increase to 32.5% in 2023. The extension to the loss carry-back rules also means loss making companies may benefit from higher rates of relief than previously.
How to claim R&D tax relief
R&D tax relief is largely underclaimed because companies do not realise they are eligible. If your company is engaged in product or process development or improvement, speaking to an R&D expert can determine whether you are eligible to claim.
The relief is available to companies in all sectors. R&D claims are made via the company’s tax return and, if the company is due a cash payment from HMRC, HMRC aim to pay this within 28 days of the claim being submitted.
An R&D expert can work with you to prepare your claim whilst saving the company’s time and resources.
A new relief was also announced in the Budget which is of interest to companies investing in R&D facilities in the UK, or any companies undertaking investment in fixed assets.
An enhanced first year capital allowance will apply for expenditure between 1 April 2021 and 31 March 2023. Qualifying plant and machinery will be eligible for a super-deduction of 130% which can be combined with the existing 100% Research and Development allowances (RDAs) on all capital expenditure relating to R&D facilities (excluding land).
How can you get started?
If your company is involved in any new product or process development, or in improving products and processes, Radius can help you determine whether R&D tax relief is available to your company.
You can also try our R&D tax relief calculator, giving you an estimate based on your company type, R&D spend and yearly profit.