Five benefits R&D tax credits can bring to your business

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    Ian Hawkins

    Page written by Ian Hawkins. Last reviewed on February 5, 2024. Next review due April 6, 2025.

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      There’s more to this scheme than boosting your bottom line (though it can do that too): why you need to check your eligibility for R&D tax credits. 

      Funding your business often means taking a blended approach: a business loan here, a grant there, sometimes dipping into savings, sometimes consolidating loans. 

      One way to free up funds for your business is through tax incentives, and this can often mean getting your accountant involved to find out what’s hiding in the small print of the last budget. 

      One scheme you should look at straight away is the R&D (research and development) tax credit scheme, designed to boost innovation in UK businesses. To qualify, R&D projects must relate to science or technology, but HMRC takes a broad definition which includes investment into IT systems, data, cloud computing, mathematics, and more. 

      Many companies have had to step up their innovation to overcome restrictions imposed by Brexit and the pandemic, so if you’re building a startup or developing processes and products to meet a demand in an evolving market, it’s likely that you’ll qualify for R&D tax credits. 

      Great news: R&D tax credits can be claimed for up to two years prior to the date of your claim – so check the diary because you may be able to qualify on activities from 2021. 

      Why should you claim R&D tax credits?

      There are great reasons – and not just that they boost your bottom line: 

      • They can help to reduce your tax liability
      • They can provide a cash injection for your business
      • They can help to improve your cash flow
      • They can make your business more competitive
      • They can attract investors

      The amount of R&D tax credit that a business can claim is based on the amount of money it spends on qualifying research and development activities. The rate of the credit is as follows: 

      Up to 1 April 2023, for every £100 spent on qualifying R&D activities, HMRC allows you to claim that against tax and in addition a further £130 – a total of £230.  

      After 1 April 2023, that was reduced down to 86 percent – or £186. 

      The good news is that you can go back two years and claim 2021 and 2022 at the old rate. The new rate only comes in for expenditure after 1 April 2023.

      R&D tax credits can be claimed back through the business’s corporation tax return or through self-assessment. They can also be used to offset income tax or National Insurance contributions.

      If you think your business may be eligible for R&D tax credits, you should speak to an accountant or tax advisor. They will be able to help you assess your eligibility and claim the credits that you are entitled to.

      How can Swoop help? 

      Swoop offers full R&D claim support. Our team will craft personalised R&D solutions for your business, give training on how to use the Swoop Grant system and produce a detailed financial report to help you maximise savings.

      Find out how Swoop can maximise your claim, identify innovative activities and take care of your claim for you.

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      Written by

      Ian Hawkins

      Ian Hawkins is Head of Content at Swoop. As a freelance business journalist and filmmaker he has reported from Europe, Central and North America and Africa. His films and writing have appeared on BBC World, Reuters and CBS, and he has spoken at conferences on both sides of the Atlantic on subjects including data, cyber security, and entrepreneurialism.

      To read our editorial policy, please click here.

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