R&D tax credits are considered to be the biggest single funding mechanism provided by Government for investment in business
The Research and Development (R&D) Tax Credit scheme is an EU initiative that is aimed at small and medium sized enterprises (SME’s), and seeks to recover development costs that companies have invested in innovative product and manufacturing processes. The UK also has a large company scheme.
Over £1.0bn has already been given back to UK companies during the 2009-2010 tax year, over £6.0bn since 2000. Following recent Budget announcements made in both 2011 and 2012 the scheme is set to become even more attractive to business;
From 1 April 2012, the rate of R&D tax credits for SME’s will increase from 200% to 225%.
The Government will reduce the main rate of corporation tax by an additional 1% from April 2012. Therefore, the rate will fall by 2% from 26% to 24% in April 2012, to 23% in April 2013 and to 22% in April 2014.
Introduction of Above-the-line R&D tax credits with a minimum rate of 10% will also come in from April 1, 2013.
£1.1bn was given back to UK companies during 2010-2011, over £7.0bn since 2000.Over 10,000 companies benefited in the last financial year, however 150,000 potentially qualify. Following recent Budget announcements the scheme is set to become even more attractive to business;
From 1 April 2012, the rate of R&D tax credits for SME’s increased from 200% to 225%.
The Government reduced the main rate of corporation tax, the rate will fall by 2% from 26% to 24% in April 2012, to 23% in April 2013, 22% in April 2014 and 20% in April 2015.
Effective April 2013 the Government will introduce an above the line (ATL) R&D Tax credit. This will have a headline tax benefit rate of 10% and enable loss-making companies to claim cash credits.
- For large companies (as classified under the rules of the R&D scheme), this change will move the R&D benefit from the tax line in a large company's accounts to operating profit.
- A company will therefore be able to directly offset the relief against the cost of carrying out qualifying R&D in the same was as it would with a grant.
- The ATL credit is designed to make R&D relief more visible to those making investment decisions and provide greater cash flow support to companies with no corporation tax liability.
- This will affect all large companies who carry out qualifying R&D, but will have a particular incremental cash benefits for large companies who have tax losses.
The introduction of the ATL credit follows an increase in the rate of the small and medium-sized enterprises (SME) R&D tax credit from 175 per cent to 225 per cent at Budget 2011, which continues to provide targeted support for early stage companies and start-ups investing in R&D in the UK.
Do you qualify?
The R&D Tax Credit Scheme benefits businesses designing, developing and producing new products and manufacturing processes, including in house software development.
To qualify you need to be a UK Limited Company that has been in business for at least 12 months and be making PAYE and National Insurance contributions.
Do you employ fewer than 500 people? More than 500, qualifies for the large company scheme.
You can get a tax refund for each of the past 2 financial years immediately, that’s £80,000! Based on an HMRC annual average claim value of £40,000 for SME’s, and for large companies it’s £300,000.
Why do Companies need our service?
Preparing an R&D claim is not something that can easily be performed solely by the company, or by their accountants in isolation, unlike many other aspects of company tax.
GGTC makes the difference, maximising claim value;
- Establish the right project start and finish dates
- Include full Project Team members, management, R&D technicians and engineers, production and operations personnel
- Financial evaluation that is fully aligned with the R&D activities
- Deploy a specialised team of Technical and Financial Analyst’s reflecting the claim report requirements
- Claim activities are effectively co-ordinated and communicated both internally and externally
- Liaise with accounting professionals to compile and submit R&D Tax claim
- Direct interface with HMRC to resolve queries and enquiries
- Adopt a compliant project tracking and reporting process
- Future claim opportunities are identified, planned and developed
- Claims are fully maximised to recover the highest possible claim payments
GGTC are the largest handlers of R&D Tax Credit Claims for UK SME's
Customer R&D Tax Credit Claim Process:
- Free, no commitment assessment of R&D Tax claim opportunity
- Complete technical and financial evaluation
- Submit claim to Accountant for filing with HMRC
- Accountant completes the tax and CT600 work as normal
- Claim is filed to HMRC by the Accountant
- Respond to any HMRC challenges, queries and inquiries
- HMRC issue payment, with average time to cash from filing a successful claim around 42 days