The 12 Days of R&D Tax Credits: A Festive Guide to Maximising Your Benefits
As we begin December 2023, the Christmas lights twinkle and the jingle bells rock, there’s another reason for businesses to celebrate the festive season: R&D tax credits. Wrapped up with a bow of opportunity, these credits can offer a financial boost just in time for the holidays. So, in the spirit of the season, let’s count down the “12 Days of R&D Tax Credits,” a merry (but serious) guide to maximising your benefits.
On the First Day: Know Your Eligibility
Partridges and pear trees aside, the first step to maximising your R&D tax credit is understanding if you’re eligible. R&D doesn’t just happen in a lab; it’s in the development of new software for your e-commerce or a unique recipe for your Christmas pudding. Dive into the HMRC guidelines and see if your business’s activities qualify.
On the Second Day: Document Rigorously
Two turtle doves symbolise love, and you should love your documentation. Detailed records of your R&D activities, including project trials, iterations, and failures, are crucial. This paperwork is the backbone of your claim and can be the difference between a merry or meager tax credit.
On the Third Day: Define Your Projects
French hens could be researching new feed formulas, but what about you? Clarify which of your projects fall under R&D. Be precise in how these endeavors seek to resolve scientific or technological uncertainties – that’s what the credits are designed for.
On the Fourth Day: Calculate Expenses Accurately
Calling birds call out expenses; you should too. Costs can include staff wages, subcontractor fees, materials, and software. Ensure you’re including all R&D-related expenses in your calculations to maximise the credit you can claim.
On the Fifth Day: Seek Expert Help
Five golden rings are valuable, and so is our professional advice. Consider consulting Yuzu Group’s R&D tax specialists. Our expertise can illuminate areas you might have missed and help you claim the maximum amount.
On the Sixth Day: Keep an Eye on Deadlines
Geese are a-laying, and deadlines are approaching. R&D tax credit claims can be made up to two years after the end of the accounting period. Mark your calendar to ensure you don’t miss out.
On the Seventh Day: Understand the SME Scheme vs. RDEC
Swans a-swimming navigate waters just as you should navigate schemes. If you’re an SME, the SME R&D relief could be for you, offering a higher relief rate. Larger companies can benefit from the Research and Development Expenditure Credit (RDEC) scheme.
On the Eighth Day: Include Prototyping Costs
Maids are a-milking, and you should be ‘milking’ your prototyping costs. Prototypes can be a crucial part of R&D as they often lead to new product developments. Remember to include these costs in your claim.
On the Ninth Day: Don’t Forget Overheads
Ladies dancing can’t do so without music; your R&D often relies on indirect support. Overheads such as utilities and materials used in the R&D process are also eligible for relief.
On the Tenth Day: Check for Subcontractor Expenses
Lords are a-leaping over hurdles, and you should leap at the chance to include subcontractor expenses. If you have hired external help for your R&D projects, these costs may be eligible, so make sure to add them to your claim.
On the Eleventh Day: Review Past Claims
Pipers piping tunes of old, review past claims for gold. Sometimes, eligible R&D activities might have been overlooked in previous years. It’s worth revisiting past claims as you may be able to make an amended claim.
On the Twelfth Day: Plan for Next Year
Drummers drumming up the future, plan your next R&D ventures. Start strategising how you will continue to innovate and claim R&D tax credits in the coming year. Reflect on this year’s process to streamline your next claim.
Celebrate the season by giving your business the gift of financial support. With each day of R&D tax credits, let your company’s innovation shine brighter than the star atop the Christmas tree. Here’s to a prosperous New Year filled with successful R&D ventures.
