Business organizations that usually participate in projects qualified as Research and Developments can benefit from the Research and Development Tax Credits. The term Research and Development Tax Credit may refer to a certain tax amount a company can claim back when it undertakes Research and Development projects. Basically, the primary objective of Research and Development Tax Credit is to see more companies carry out R&D projects. Mostly, Research and Development Tax Credit is meant for Small and Medium-Sized Enterprises, SMEs. By engaging in Research and Development, SMEs can get up to 33% R&D Tax Credit. Larger companies that undertake Research and Development projects can also reclaim a Research and Development 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. Firstly, you will need to know the size of your company. As aforementioned, Research and Development Tax Credits favors two types of companies with regard to their sizes. The two types of business are Small and Medium-Sized Enterprise companies, SMEs and larger well-established companies. The size of a company is usually determined by the number of employees and annual turnover. When it comes to the size of SMEs, it has employees less than 500. Usually, SMEs will benefit more from the Research and Development Tax Credit scheme. Usually, SMEs can claim up to 33% of all their Research and Development costs. 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. When it comes to R&D Tax Credit, getting to know what can be claimed is very vital. However, this can be a little difficult. In terms of what you get as Tax Credit benefit, you will get more if you claim more. On the other hand, if you incorrectly claim your Research and Development expenses, you may raise red flags. With incorrect claims, you will be surprised at the process would turn lengthy. The same may also trigger enquiries which could delay your R&D Tax Credit reclaim process.
Another tip you will need to consider is whether or not you are a linked company. R&D Tax credit will mostly favor SMEs. Some SMEs will, however, not benefit from the scheme. The reason behind this is that they could be linked to another bigger company.