Could R&D tax relief help you avoid further cuts?
The government-funded R&D tax credit scheme hasn’t changed since the Covid-19 pandemic hit, but the need for SMEs to access financial support has.
While several financial measures have been put in place, there are reports of lengthy, complicated processes or delays to receiving these critical funds.
Thankfully, HMRC is sticking to the 28-day processing time for R&D tax credit claims, meaning there might be one more way for you to avoid making redundancies, or losing your business altogether. The average claim value is £63,000; read on to see if you could benefit.
Redundancies hit a record high
The number of payroll employees has fallen by 828,000 since February 2020 according to the latest figures from the Office of National Statistics, with redundancies reaching a record high in the period September – November 2020.
Estimates for the same period suggest there were 32.50 million people aged 16 and over in employment – 398,000 fewer than a year earlier, representing the largest annual decrease in a decade (since December 2009 – February 2010).
The latest Business Impacts of Coronavirus Survey by the ONS suggests that 18% of the UK workforce were furloughed between 25 January to 2 February 2021; within businesses temporarily closed or paused trading that number rises to 45%.
Even more alarmingly, 57% of those same closed or paused businesses reported having cash reserves to last them less than 6 months.
So with lockdown still in place, thousands on furlough, and so many businesses with cash reserves running low, it’s fair to say the impact of Coronavirus will continue to hit the UK labour market for many months – if not years – to come.
Funding to avoid redundancies
Unfortunately, as we can see for many companies losing their workforce as a result of the pandemic has become a harsh reality, and for some, the support available isn’t going to be enough to avoid further cuts.
With that in mind, we really encourage you to explore whether you’re eligible to claim Research and Development Tax Credits.
As we said up top, this Government incentive has a 28-day processing time from filing the claim with HMRC to receiving the potentially-sizeable cash injection, and SMEs from any sector can make a claim.
Don’t let the name put you off, either. The definition of ‘research and development’ is surprisingly broad, and an advisor like MPA will be able to tell you if you’ve undertaken any qualifying activity quickly.
With Covid-19 forcing businesses to adapt – particularly around home working and digital – many more could be eligible to claim than ever before. Are you one of them?
Spending time and money on improving infrastructure by way of bespoke security updates, developing new information sharing processes, improving digital or online services, or even building brand new technology or solutions are all things you could claim costs on – as long as the solution didn’t already exist, and as a result you’ve sought to advance science or technology to meet your or your customers’ requirements.
If you’re not sure about working with a specialist like MPA, you can absolutely apply for R&D tax relief yourself to. If you do need some help, we’ll make the process quicker, easier and smoother, make sure you’re including all eligible costs to maximise the amount of relief you receive, and deal with HMRC so you don’t have to.Contact us