The awareness of financial incentives available to SME’s is increasing: so why are so many not doing anything about it? Despite greater awareness of R&D Tax relief amongst SME’s, a significant amount of eligible companies aren’t claiming. So why is this?
Research and Development (R&D) tax relief specialists have been successful in raising awareness of the scheme, but are these specialists then picking and choosing their clients based on the return to them? Worryingly this could be the case and putting SME's off claiming as they believe it wouldn't be worth it for them, when really the specialists don't see it as profitable.
The R&D Tax relief available is generally speaking, proportional to the size of the company making a claim. So what is considered as small for some R&D specialist companies, could make a fundamental difference to the SME making the claim.
There is a general assumption that is only available to technology and science focused companies, this couldn't be further from the truth. Any innovative company can make a claim potentially reducing its tax bill or receiving cash from HMRC. All the company claiming has to have done is create a new product or make significant improvements to an existing range. But it doesn't end there, any company seeking improvement and develop processes around manufacturing or software.
The government recognises the need to further encourage innovation and as a result has increased the amount of enhanced expenditure for SMEs from 100% to 125% allowing relief on 225% of their R&D expenditure in 2012. Also in that year it removed the requirement for a minimum expenditure of £10,000 on R&D, opening up the scheme allows companies that undertook lower levels of R&D activity to now make claims that weren't able to be made before.
The government have increased the appeal of the scheme at every budget in recent years. With a return of potentially up to £33 for every £100 spend on R&D what's not to like?
If you are able to answer 'yes' to any of the questions below you could qualify for R&D Tax relief:
- Have you developed a product?
- Have you researched new technology?
- Have you produced a product that is cheaper and more efficient than those already in the market?
- Have you created a product that doesn't already exist?
Aspen Waite does not discriminate against smaller firms and we pride ourselves on our ability to work any time, any place, anywhere. We charge a fixed percentage of your tax saving on a success only basis so your company will always be better off for knowing us.
Key points on R&D
- The figures show a concentration of claims in the 'Manufacturing' (31%), 'Professional, Scientific and Technical' (19%) and 'Information and Communication' (26%) sectors, accounting for 37%, 24% and 20% of the total amount claimed respectively.
- By the end of 2013-14, more than 33,800 different companies had made claims under the SME (Small and Medium Enterprise) scheme since it began in 2000-01, and over 7,800 under the large company scheme, which launched in 2002-03.
- The increase in the rate of enhanced expenditure for SMEs from 100% to 125% in April 2012 and then to 130% in April 2015is a factor in the increase in the support claimed by SMEs.
Statistics and information provided by HMRC. More information on the scheme can be found online.