Essential Things to Understand About R&D Tax Credit
You need to know that R&D tax credits can surely be somewhat confusing. There are certainly new laws that are being passed every years for the past decade and there are also those businesses that are not sure about the benefits which they can obtain from the government.
Almost any time, money or resources that is spent with that goal of advancing and also improving the products or the processes of a certain company can actually be considered part of research and development. With this, such means that any company that is making new things may be eligible for the R&D tax credits. This can be from improving that existing software to testing those ideas and to manufacturing something futuristic like that flying car, any kind of research and development expenses may count to the tax credit. In the UK, any company regardless of size that is spending money on the research and development may qualify for such tax credits.
Well, the amount of the tax credits that you can obtain would depend on the business’ size you have and where the operations are actually based. The US and the UK have different policies when it comes to offering R&D-based tax relief but such qualifications to get the tax credits are the same. Well, the smaller the company and also the lesser revenue that they are getting, the bigger percentage of such R&D costs they can have with their tax credits.
To be recognized as a small or a medium business in the UK, the business should have less than 500 people and must have a turn over of less than £100 million or should have such gross assets of not above £86 million. Such businesses can get that significant advantage from the recent tax credit legislation. If the SMB is really lucrative, then about 26 percent of the R&D costs may actually be subjected to tax credit.
On the other hand, in order to qualify as a large business in the UK, the organization should have over 500 people or a turnover of over £100 million and the gross assets must be over £86 million. The tax relief is given at 11 percent of such qualifying R&D expenditure. This may just be one third of the maximum rate for the SMB but the total credit that one may claim doesn’t have a ceiling.
So that you can benefit much from the R&D tax credit, then it is really essential that you would work with such R&D associates for you to have the right guidance and so that you can have the most benefit as well. You can easily go online and just get more information from them.