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Budget 2021 – Enhanced Value of R&D for Companies
The cost to the taxpayer of Covid by the end of the next financial year is predicted to be £407 billion, much of which has been funded by debt.
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R&D Tax Relief: Preventing abuse of R&D for SMEs
Following our previous blog posts on HMRC’s intention to prevent abuse of the Research and Development (“R&D”) Scheme for SMEs (https://blog.aab.co.uk/rd-tax-relief-preventing-abuse-of-the-sme-scheme) here is a reminder of the upcoming changes to the scheme.
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Potential Changes to Qualifying Costs for Research and Development Tax Relief
Following on from the Spring Budget 2020, the Government has announced that they are now consulting on the eligible expenditure that can be included in Research and Development (“R&D”) tax credit claims. The last formal consultation on the qualifying cost categories for R&D was published in November 2010 and the Government feels that now is the right time to reassess this area of the relief.
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COVID-19 – R&D Claims
Although these are uncertain times due to the impact of the COVID-19 pandemic, HM Revenue & Customs (“HMRC”) have confirmed their commitment to processing Research and Development (“R&D”) tax relief claims timeously to ensure companies eligible for repayments will still get these issued within 28 days if they are a small or medium sized claimant.
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Budget 2020: Positive News on Research & Development (R&D) Tax Relief and Capital Allowances
The Budget made it clear that the UK’s success in the global economy will be rooted in innovation and cutting-edge technology. Plans to significantly increase public R&D investment to £22 billion per year by 2024-25 were confirmed, increasing direct support for R&D to 0.8% of GDP which places the UK among the top quarter of OECD nations.
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Rewarding Innovation
The UK government understands that promoting UK innovation is key to making the UK more competitive globally, increasing productivity and fuelling economic growth. One aspect of this is the promotion of Innovation tax reliefs available to both Small and Medium Sized Enterprises (SMEs) and large companies.
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Have you submitted your December R&D claim?
Research and Development (“R&D”) tax relief is a government initiative to support businesses investing in innovative activities. There are two R&D tax relief schemes that companies can claim under – the SME scheme and the large company or RDEC scheme. Both are beneficial to companies in either reducing a tax liability or creating a payable tax credit.
The claim for R&D tax relief is included within the company’s Corporation Tax return that gets submitted to HMRC.
The deadline for claiming R&D tax relief is two years from the end of the accounting period in which the R&D was undertaken. For example, if your company carried out R&D activities in the period ended 31 December 2017, the claim is required to be submitted by 31 December 2019. Although a Corporation Tax return’s filing deadline is one year after the accounting period end, a return can be amended to include an R&D tax relief claim.
By preparing and submitting an R&D claim as early as possible, this will help to maximise the claim and ensure the company receives the benefit of the claim as early as possible.
If you have a qualifying R&D project in the years ended 31 December 2017 and 31 December 2018, we can help your R&D claims in advance of the year end.
How can AAB help?
- Establish whether your company qualifies for R&D tax relief;
- Provide advice on the requirements for supporting documentation and records;
- Work with you to prepare and submit claims to HM Revenue & Customs.
If you have any queries, please do not hesitate to get in contact with Andrew Blair, Corporate Tax Senior Manager, or your usual AAB contact.
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Good News for R&D Tax Relief Claimants
HM Revenue & Customs (HMRC) has acknowledged the significant delays in processing times of Research & Development (R&D) Tax Relief claims and are taking steps to improve the turnaround time.
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R&D Tax Relief in the Construction Industry
In 2017 it was reported that the construction industry contributed £113bn to the UK economy. As one of the large drivers behind the UK economy, it is surprising how little is claimed back by construction businesses through Research and Development (“R&D”) tax relief.
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