Research and development (R&D) tax credits are an incentive from the government to prize companies for investing in innovation. R&D credits are a precious source of money for businesses to reinvest and increase their R&D. if your company invests in new product development, new services, or processes, it is eligible for an R&D credit. Credit can be in the form of cashback or corporate tax reduction. Steps towards making an R&D claim are:
Identify The Projects
Decide on which projects or investments qualify under the relevant tax authority guidelines. It is crucial to involve a competent company that offers R&D tax credit services to ensure you submit the correct details. Expert advice saves you time and provides a spot-on technical report in the first submission.
Tax Credit Eligibility
There are two R&D credit schemes a company can apply through. Factors such as the company size and whether it is linked to another business determine which scheme to use. SME R&D tax credit is for small businesses and gives a percentage cashback. Corporate R&D credit has lower percentages but has incentives such as tax reductions.
A technical report is a detailed analysis of your company’s activities and the credit you’re claiming. It includes reasons for undertaking each project, the problems it intends to solve, and proof that it solved the challenge.
R&D claim should be backed by a financial report detailing your labor costs, subcontracted and external labor, utility, material, and software costs that are directly related to the project. Engage R&D tax credit services to develop a good costing schedule that meets the requirements.
You can submit your R&D tax claim via the company’s tax return portal.