Tyas & Company Chartered Accountants, Crawley
Research and Development
Your limited company could claim Research and Development (R&D) relief.
£10000 spent on qualifying R&D can currently claim a tax deduction of £17500 and a loss making company can receive immediate tax refunds from HM Revenue & Customs (HMRC).
Government plans are increasing this uplift to 100% back-dated to 1 April 2011 and to 125% from 1 April 2012.
Many companies undertake R&D but may think that to qualify for the tax credits the work must involve test tubes, lab coats and Nobel Prize winning advances in science but this just isn’t so.
For a claim to qualify a project must “seek to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty”.
So as well as scientific advances, advances in technology, engineering, and computer software programming could qualify. What is important is that no-one else has done what you are seeking to achieve.
Currently a minimum spend of £10,000 p.a. is required to qualify but the Government is planning to scrap that requirement from 1 April 2012.
The allowable costs fall under a series of headings, the most significant of which is likely to be employee costs. The cost of wages, employer’s NIC and pension contributions of staff directly involved in R&D can be claimed as can the costs of staff who are managing or ‘supporting’ the R&D project. If an employee spends part of their working week on R&D, then a proportion of their wage etc costs can be claimed.
Other qualifying costs include materials, utilities, computer software and a proportion of sub-contractor costs. All provided, of course, that they are incurred as part of the R&D project.
Plant & Machinery can also form part of a claim as qualifying P&M can claim Capital Allowances at 100% and so be written off for tax purposes in full in the year of purchase.
We have the experience to prepare your case to help you obtain HMRC agreement that the project qualifies and then to maximise the amount you can rightfully claim. Why not contact Tyas & Company now on 01293 843900?