Since its introduction 20 years ago, the research and development (R&D) tax credits scheme has been hugely successful in incentivising innovation in the UK.
By mitigating financial risk for founders carrying out viable research & development the UK government has enabled businesses of all sizes to take the plunge when it comes to crafting cutting-edge products and services.
Year upon year, R&D Tax Credits are becoming increasingly popular. In 2020, HMRC reported a 19% increase in total financial support claimed through the scheme, reaching £7.4 billion.
However, a surprising amount of businesses still don’t take advantage of R&D Tax relief.
In fact, most eligible companies are either unaware of the program or have an inaccurate picture of the way that it works and how they can claim R&D Tax Credits.
Claim Capital are on a mission to eradicate misconceptions about R&D Tax Credits and spread the word about the unique advantages they offer the UK.
To do this, we’re going to run you through the common obstacles that founders run into when claiming R&D Tax Credits. By checking through this list, you’ll know how to gain maximum benefit from the scheme, year after year.
1. You aren’t sure if your eligible to claim R&D Tax Credits. 💡
The first pitfall within R&D Tax Credits is whether companies are aware of their eligibility.
To approach this, let’s first define what research and development actually is.
By definition, research and development (R&D) refers to activities that companies undertake to innovate and introduce new products and services or to improve their existing offerings.
So, if you’re in the process of bringing a cutting-edge product, process or service to market, chances are you’re doing research and development.
Another common misperception is that R&D Tax Credits aren’t available to certain sectors. The truth is, research & development projects from all industries are eligible! All you need to do is determine how R&D manifests itself within your project.
Let’s say you’re undertaking research and development within construction. Here, R&D spending will feed into tasks such as enhancing safety, testing, prototyping, developing new welding processes to minimise distortion, and so on.