If a company engages in Research and Development projects, it can claim it Research and Development Tax Credit benefits. You may think of Research and Development Tax Credit as a tax benefit that a company can claim back by engaging in R&D activities. One of the reasons as to why companies are given Research and Development Tax Credits is to inspire them to participate more in such projects Research and Development projects. Small and medium-sized companies are ones which are mostly entitled to benefit from Research and Development Tax Credits. By engaging in projects that fall under Research and Development umbrella, a small company can get a Research and Development Tax Credit up to 33%. Larger companies may also reclaim their R&D Tax Credit. As compared to SMEs companies which get up to 33% tax break, larger companies can only get R&D Tax Credit up to 10%.
Getting a higher benefit from R&D Tax Credit will require you to follow a number of tips and tricks. Firstly, you will need to know the size of your company. As aforementioned, Research and Development Tax Credits favors two types of companies with regard to their sizes. These are SMEs and larger companies. In most of the cases, annual turnover and the size of the workforce is used to define how big a company is. When it comes to the size of SMEs, it has employees less than 500. Usually, SMEs will benefit more from the Research and Development Tax Credit scheme. This is because, as an SME, you get reclaim up to 33% of all the expenses you incurred in Research and Development projects. On the flip side, bigger sized companies get up to 10% of everything they incur in Research and Development.
Secondly, get to know what you can claim and what you cannot claim. This is the most crucial part of the R&D Tax Credit reclaim process. This can, however, be daunting. To maximize your benefits, you will need to claim more. To avoid raising doubts with your R&D Tax Credit claims, ensure you avoid mistakes in your quest to claim more. With incorrect claims, you will be surprised at the process would turn lengthy. The same may also trigger enquiries which could delay your R&D Tax Credit reclaim process.
Another tip you will need to consider is whether or not you are a linked company. As mentioned earlier, SMEs will mostly qualify for the R&D Tax Credit scheme. Some SMEs will, however, not benefit from the scheme. The reason behind this is that they could be linked to another bigger company.