For many business owners, research and development conjures up images of serious-looking men and women sporting white coats moving silently around austere laboratories.
No surprises then that most people and businesses believe R&D is the exclusive preserve of the world’s biggest companies involved in science, advanced technology and pharmaceuticals.
But nothing could be further from the truth. In the 2014/2015 tax year normal, everyday SMEs were responsible for more than four in five UK R&D claims.
For example, a restaurant creating a new recipe, a brewery experimenting with a new pint or a start-up or SME business trying to streamline its IT by integrating some proprietary cloud technology could all be eligible for R&D.
The ‘people in white coats’ myth urgently needs to be debunked because currently SMEs are losing out not just financially but also strategically: R&D can put them one step ahead of the competition, both at home and overseas.
What is R&D tax relief?
Because R&D is inherently speculative, and has the potential to genuinely improve both the sector it is in and the broader economy if successful, the government offers businesses tax relief on any activity that qualifies as R&D.
Not just in terms of the raw materials required but also the time spent on it.
R&D tax credits are essentially the government’s way of rewarding innovative companies for developing new, or appreciably improving existing, products, processes, systems and materials — activities that are intended to increase the UK’s wealth creation capacity.
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