I am always looking for ways to help businesses and last week Barrie Dowsett sent me these details..
Innovate UK has launched a £15m grant funding pot for innovative projects in any technology, engineering or industrial area.
As grant funding is non-repayable, and Innovate do not take any equity, IP or commercial rights over your project, I thought you would be very interested in knowing more about this excellent funding opportunity. Priority will be given to proposals that are likely to lead to sustainable gains in productivity and/or access to new overseas markets through export led business growth.
Key information:
-Funding is available for testing the feasibility of your idea (including proof of market), research and develop it and demonstrate it in a prototype
– Project value: £25k to £1m depending on type of R&D undertaken
– Project duration: 6 to 36 months
– Micro/small business receive up to 70% of project costs, Medium up to 60% and large businesses receive up to 50% dependant on stage of research/development
– Application deadline is 12pm on the 7h September 2016
– Funding made available from around December 2016 onwards
National success rates for Innovate UK grants are typically less than 10%, however Myriad have success rates approaching 60%.
R&D Relief is a Corporation Tax relief that may reduce your company or organisation’s tax bill.
Alternatively, if your company or organisation is small or medium-sized, you may be able to choose to receive a tax credit instead, by way of a cash sum paid by HM Revenue and Customs (HMRC)
But your company or organisation can only claim R&D Relief if it’s liable for Corporation Tax.
The Small and Medium-sized Enterprise Scheme
This scheme has higher rates of relief. Since 1 April 2015, the tax relief on allowable R&D costs is 230% – that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £130 on top of the £100 spent. It also includes a payable credit in some circumstances.
The Large Company Scheme
If your company isn’t small or medium-sized, then you can only claim under the Large Company Scheme.
Since 1 April 2008, the tax relief on allowable R&D costs is 130% – that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £30 on top of the £100 spent. If instead there’s an allowable trading loss for the period, this can be increased by 30% of the qualifying R&D costs – £30 for each £100 spent. This loss can be carried forwards or back in the normal way.
Government Statistics show a steady growth in claims
Construction Examples of R&D
The investigation into the removal of contamination from sites, including land remediation
Advancements in structural techniques that aid construction relating to unusual ground conditions
The innovative use of green or sustainable methods and technology
Development or adaptation of tools to improve efficiency
The use of new or unique materials, e.g. recycled products
Improvement on existing construction methods or development of new ideas to solve ongoing issues related to the site environment or project specifications
Innovative architectural design
IT Systems Examples of R&D
The design, construction and testing of systems, devices or processes e.g. new hardware or software components, digital interface and control systems
Integration of legacy and new systems e.g. following a corporate merger or acquisition, the adoption of an Enterprise Architecture or externally with partners in joint ventures
Advances in network management and operational tools, development of wired or wireless technologies, designing mobile and interactive services, evolution of new generation network switching and control systems
Data intensive activities e.g. the collection, storage and analysis, distribution and retrieval. Defining or working with new or emerging data models and metadata standards, integration with third party content
Research and Development (R&D) tax relief (or credit) is a company tax relief that can either reduce a company’s tax bill or, for some small or medium sized (SME) companies, provide a cash sum. It is based on the company’s expenditure on R&D.
For there to be R&D for the purpose of the tax relief, a company must be carrying on a project that seeks an advance in science or technology. It is necessary to be able to state what the intended advance is, and to show how, through the resolution of scientific or technological uncertainty, the project seeks to achieve this.
These are the key questions that you will be asked when requesting an R&D Tax Credit from HMRC:
How was it decided that R&D had taken place
A description of the scientific & technological advance sought
The uncertainties involved
How and when the uncertainties were resolved
Why the knowledge being sought was not readily deducible by a competent professional
Were any grants, subsidies or contributions received for the project within the claim
Who owns the Intellectual Property of the products resulting from the R&D
Was the R&D carried out for others ie clients, this could mean your claim is rejected
Amount of relief
For expenditure incurred up to and including 31 July 2008 SMEs can deduct 150% in respect of their qualifying R&D expenditure and the payable tax credit can amount to £24 for every £100 of actual R&D expenditure. For expenditure incurred on or after 1 August 2008 SMEs can deduct 175% in respect of their qualifying R&D expenditure and the payable tax credit can amount to £24.50 for every £100 of actual R&D expenditure. The rate is further increased from 1 April 2011 to 200%, and a payable credit of £25 for every £100 of spend.
Large companies can deduct 125% in respect of qualifying expenditure incurred up to and including 31 March 2008 and can deduct 130% thereafter.
Here is a template (originally created by HMRC but updated by me) to help you calculate the value of your claim it has references to relevant HMRC guidance.
The claim is made on your corporation tax return (CT600) if you discover that you should have made a claim in a prior year its not too late, follow this link to find out how to correct prior year returns http://www.hmrc.gov.uk/ct/managing/company-tax-return/amend.htm
Software could be tool to enable the R&D or a goal in its own right, but simply modifying existing software isn’t R&D. It has to follow the same rules as other R&D and be an advance in science and technology.
Construction companies have claimed R&D for developing new building systems and new building technologies.
R&D could be a new process rather than an invention.
It doesn’t have to have a patent but there could be advantages to having one, such as patent box tax relief.
All companies spending at least £10,000 in their accounting year on qualifying R&D are entitled to claim a deduction when calculating their taxable profits of:
175% of qualifying expenditure for SMEs in respect of expenditure incurred on or after 1 August 2008 rising to 200% from April 2011 and 225% from April 2012, subject to EU approval under the State aid rule
or
130% of qualifying expenditure for larger companies until 31 March 2008
