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. Basically, the primary objective of Research and Development Tax Credit is to see more companies carry out R&D projects. In most of the cases, Research and Development Tax Credits are mostly put in place for SMEs, that is, Small and Medium-sized businesses. 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%.
To maximize your windfall when it comes to R&D Tax Credit benefits, there are tips you will need to consider. The first tip you will need to consider is the size of your business. 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. When it comes to the size of SMEs, it has employees less than 500. R&D Tax Credit scheme is usually more generous to SMEs. Usually, SMEs can claim up to 33% of all their Research and Development costs. On the flip side, bigger sized companies get up to 10% of everything they incur in Research and Development.
The second thing you will need to think of is what you can or cannot claim. When it comes to R&D Tax Credit, getting to know what can be claimed is very vital. Getting to what can and cannot be reclaimed is not easy. Generally, the more you get to claim, the more you get in terms of R&D Tax Credits. As you try to include more claims in your Research and Development Tax Credit, avoid errors that could raise questions. This is because mistakes could make the process to unnecessarily long. The same may also lead to delays especially when you have to answer questions as posed to you regarding your claim.
Another tip you will need to consider is whether or not you are a linked company. Small companies are the ones which benefit the most from Tax Credit Scheme. However, not all SMEs will benefit from the tax break even when they participate in Research and Development. The reason behind this is that they could be linked to another bigger company.