As we wrap up what has been probably the most unsettled year in living memory, it’s time to start planning for the next 365 days.
As you do your Christmas shopping for your loved ones this festive season, don’t forget to treat your business, too. While none of us can know what 2021 will bring, there’s still plenty you can do to help create a bright future for your company.
If you’re not sure what to put at the top of your business’s Christmas wish-list, R&D tax relief is a great option, providing lots of potential opportunities for your business in 2021.
Here are five reasons R&D tax relief is the perfect gift for your business….
ONE: You don’t need to pay it back
R&D tax relief is a statutory incentive from HMRC that provides businesses with a reduction on their corporation tax bill. If your business has conducted a research and development project in the last two financial years, you can claim back a proportion of that R&D spend. This usually amounts to several thousand pounds, depending on how much your firm spent on R&D. If your claim is successful, HMRC will reimburse the funds into your bank account within 28 days.
Unlike various other types of business support loans (including the coronavirus Bounce Back Loans and Business Interruption Loans), this money is yours to keep. You can spend it whenever you want (or save it), and there’s no expectation on you to pay it back.
TWO: You only pay your R&D tax relief adviser if your claim is successful
The best (and easiest) way to make an R&D claim is through a dedicated tax relief adviser. R&D consultants work on a contingent fee model: you only have to pay them if your R&D claim is successful.
One of the greatest benefits of R&D tax relief is that it is incredibly low risk. Your business literally has nothing to lose, since you pay your adviser out of the reimbursement. Think of it as a free injection of cash for your business.
THREE: You can spend it on whatever you like
Once your business has made a successful claim and been reimbursed for its R&D, there are no limits to what you can spend the money on. Given the disruption of 2020, this could prove to be a real lifeline for your business.
Many of our clients this year are using their R&D tax relief payments to cover any damage caused by the pandemic. Usually, though, companies use their R&D reimbursements to grow their business. Whether you want to hire someone new, invest in staff training, or even reward staff for their hard work in 2020, there’s no limit to the potential benefit R&D tax relief could bring.
FOUR: Your R&D tax relief adviser does all the legwork
Making an R&D tax relief claim through a consultant is so simple, even the most time-poor of businesses can do it.
Once you’ve engaged an R&D tax relief consultant, they will conduct most of the work on your behalf. You don’t need to prepare any additional documents yourself. All you need to do is spend a couple of hours talking to your consultant about any possible R&D projects. Then you’ll need to send over certain information, like invoices and timesheets
Your consultant will write up your projects into case studies, as well as preparing the rest of the report for HMRC. Once you have signed it off, they will submit the report for you. In the unlikely event that HMRC does come back with any queries, a good R&D tax relief firm will handle those and defend the claim on your behalf.
FIVE: Your business deserves it
HMRC offers R&D tax relief to reward businesses for their innovative risk-taking. While innovation is very beneficial for the economy, HMRC understands that research and development involve an inherent financial risk to businesses. These projects cost money, and they don’t always deliver profitable results.
If you conduct this sort of work, you deserve to be rewarded for it. Even if R&D is completely out of the ordinary for your business and you’ve only ever conducted one project, your company may still be eligible for this incentive.
To find out more about treating your business to the gift of R&D tax relief this Christmas, get in touch with Hamilton Blake Consulting.