R&D tax: 5 common misconceptions

I could probably give you 25 misconceptions that I hear on a daily basis but, for now, here are 5 common misconceptions regarding the UK R&D tax relief:

  1. “You need to have paid corporation tax to receive an R&D tax credit cash payment from HMRC” – wrong! HMRC will help you supplement your development costs by paying you a tax credit equivalent to roughly 25% of your qualifying R&D spend (if loss-making).
  2. “You need to have paid sufficient PAYE / NIC to receive an R&D tax credit cash payment from HMRC” – wrong! This requirement was dropped for accounting periods ending on or after 1 April 2012.
  3. “I must have missed the boat as this is the first I’ve heard of R&D tax relief being relevant to a company like mine and we incurred our development expenditure in last year’s accounts” – wrong! We can apply claims retrospectively over the accounting periods that ended in the past two years.
  4. “My company is too large to be eligible to make claim under the preferable SME R&D tax regime” – probably wrong! The SME definition for R&D tax covers probably 90%+ of the UK companies i.e Less than 500 employees plus either turnover of less than €100m or balance sheet total of less than €86m.
  5. We don’t have an R&D unit with specialists in white coats – probably one of THE most common misconceptions – fear not, the R&D tax relief applies across all sectors and industries as technological advances can happen anywhere…

Please get in touch if you’d like to learn more  – plus no doubt allow us to dispel the other 20 misconceptions…!

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