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 that undertake Research and Development projects can also reclaim a Research and Development Tax Credit. However, they can only get up to 10% of all the costs they incur in Research and Development.
To maximize your windfall when it comes to R&D Tax Credit benefits, there are tips you will need to consider. In most of the cases, the first thing you will need to think of is how big is your company. As aforementioned, Research and Development Tax Credits favors two types of companies with regard to their sizes. The companies, in this case, are small or simply SME companies and the larger companies. Basically, the number the yearly sales that a company makes and the number of employees a company has are used to determine the size of a company. SMEs are usually characterized with a workforce of fewer than 500 workers. Between SMEs and Larger companies, SMEs tend to get more from the R&D Tax Credit. 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.
Secondly, get to know what you can claim and what you cannot claim. In every claim you will be having, the idea of knowing what you can claim and what you cannot claim is essential during the Tax Credit reclaim process. Getting to what can and cannot be reclaimed is not easy. To maximize your benefits, you will need to claim more. To avoid raising doubts with your R&D Tax Credit claims, ensure you avoid mistakes in your quest to claim more. With incorrect claims, you will be surprised at the process would turn lengthy. The same may also lead to delays especially when you have to answer questions as posed to you regarding your claim.
You will also need to determine whether your business is linked or not. Small companies are the ones which benefit the most from Tax Credit Scheme. There are some SMEs that will not enjoy the benefits of being small. The reason behind this is that they could be linked to another bigger company.