Research and development (R&D) relief is often overlooked because firms “either don’t realise they qualify or think it’s more trouble than it’s worth”, says Tax Tips & Advice. Yet the R&D tax break is worth twice as much as other tax reliefs.
The definition of R&D is broad – it can cover the development of a new method of erecting buildings or a new software product for the financial sector. If your firm spends £30,000 on R&D in 2012/2013 and pays corporation tax at 20%, it will be entitled to a reduction in its tax bill of £13,500 (£30,000 x 2.25 x 20%).
HMRC has launched a pilot scheme offering a dedicated one-to-one service to “help companies formulate and optimise claims. “Once the principles have been agreed on, claims for the following two years will be accepted without the usual scrutiny and questions associated with R&D relief.”
Open to firms with 50 or fewer employees, the aim is to open it up to all businesses in the near future.