If a company engages in Research and Development projects, it can claim it Research and Development Tax Credit benefits. Research and Development Tax Credit is typically a tax break meant for companies which participate in Research and Development projects. 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%. Companies which are a bit larger are also entitled to an R&D Tax Credits too. However, they can only get up to 10% of all the costs they incur in Research and Development.
Getting a higher benefit from R&D Tax Credit will require you to follow a number of tips and tricks. In most of the cases, the first thing you will need to think of is how big is your company. With respect to size, two different types of business are eligible for R&D Tax Credits. The two types of business are Small and Medium-Sized Enterprise companies, SMEs and larger well-established companies. In most of the cases, annual turnover and the size of the workforce is used to define how big a company is. SMEs are usually characterized with a workforce of fewer than 500 workers. R&D Tax Credit scheme is usually more generous to SMEs. This is because, as an SME, you get reclaim up to 33% of all the expenses you incurred in Research and Development projects. By carrying out Research and Development projects, a larger companies can only reclaim up to 10% of what they spend.
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. As you try to include more claims in your Research and Development Tax Credit, avoid errors that could raise questions. With incorrect claims, you will be surprised at the process would turn lengthy. Mistakes could also lead to several questions directed to you hence creating delays.
Thirdly, get to know whether you are a linked company. Small companies are the ones which benefit the most from Tax Credit Scheme. Some SMEs will, however, not benefit from the scheme. This is because, your company could be considered as linked.