If a company engages in Research and Development projects, it can claim it Research and Development Tax Credit benefits. 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. 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. 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 Research and Development, SMEs can get up to 33% R&D Tax Credit. 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%.
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. 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. 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. Larger companies only get up to 10%.
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. However, this can be a little difficult. To maximize your benefits, you will need to 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 lead to delays especially when you have to answer questions as posed to you regarding your claim.
Thirdly, get to know whether you are a linked company. As mentioned earlier, SMEs will mostly qualify for the R&D Tax Credit scheme. However, not all SMEs will benefit from the tax break even when they participate in Research and Development. This is because, your company could be considered as linked.