More revenue for Research and development

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[Music] research and development or r d can conjure up an image of laboratories and people in white coats but it doesn't have to be like that and if your business is undertaking any r d it can have a big impact on your tax bill as r d credits are one of the most valuable tax reliefs around r d is when you develop something innovative and new this can be a new product but could also be a new system or process a way of making things quicker or better within your business or for others and what is the effect if you've developed a new product system or service you may be eligible to claim research and development credits if you claim these credits you can increase the tax relief you receive on the expenditure to qualify for the more generous sme tax credits for r d which apply to small and medium-sized enterprises your business must meet the following three criteria one you have less than 500 employees two your turnover is less than 100 million euros three your balance sheet is less than 86 million euros larger companies qualify for a different scheme but we're concentrating on smes in this video you need to ask yourself these three questions firstly have you had a technical goal as part of a commercial or research product secondly was there at least one significant technical difficulty to overcome while trying to achieve this goal thirdly did you use people with appropriate skills and experience to carry out the work to give some examples of claims we have seen a number of clients that develop new software that can help their business and potentially other businesses too we've seen a client develop a different type of floor surfacing a client that provides meal prep develop different recipes to meet specific goals the way this works is that for every one pound you spend you get 2.30 deducted in your corporation tax return from your taxable profits what this actually means is that it increases your tax relief by nearly 25 to give you an example if you spent one hundred thousand pounds on a standard expense it would reduce your tax bill by nineteen thousand pounds that's nineteen percent however if you spent one hundred 000 pounds on expenses that could be deemed as research and development it would reduce your tax bill by 43 700 pounds which is 19 of 230 000 pounds that's an extra 24 700 pounds knocked off your tax bill so it really is well worth doing even if your business is making a loss you can claim hmrc will pay you 33 percent of the value of the amount you have spent on r d you should be aware that there are a lot of criteria you need to fill in to be able to claim research and development credits it can be a little bit technical but it is something a lot of people are eligible for but don't know about it's always worth checking as it can have a huge effect on your tax bill and it's something that hmrc actually wants to give you as the government is incentivizing you to innovate so please take a look at it i hope you find that useful if you'd like to know any more please get in touch with us if you'd like to see more videos where we answer lots of questions on tax and accounts take a look at our youtube channel you can also subscribe for more videos [Music] you