It is natural that businesses will put a huge amount of their focus into making sales. After all, it is through increased sales that your business can grow. But that can lead to many organisations failing to take other steps which can actually play a huge role in their ability to grow. And a crucial way that you can do so is through innovation.

When businesses innovate it gives them the opportunity to grow and thrive without the need to gain extra customers or increase conversions. In fact, the government wants businesses to innovate – it is for this reason that research and development (R&D) tax credits are available. However, a large percentage of businesses do not realise that they could be eligible for R&D tax credits, or don’t understand how easy it is to innovate.

Here we take a look at the truth about R&D tax credit relief – it might be the case that your business is missing out on the opportunity to innovate and grow.

Could your business be eligible for R&D tax relief?

Unfortunately, it is the case that many businesses assume that they can’t possibly be eligible for R&D tax relief. They might assume that R&D purely refers to the field of science – however, this is a misconception. Actually, R&D refers to innovation across a wide variety of sectors.

You can claim R&D tax relief if your business is attempting to solve a scientific of technological uncertainty. This might sound complicated, but it can take many forms, and it could be a new product, service, or even process.

On the official GOV.UK site, projects that count as R&D should:

• Look for an advance in science and technology
• Need to overcome some type of uncertainty
• Attempt to overcome this uncertainty
• The solution could not be easily worked out by a professional in the field

The concept is that you need to develop something that will advance your overall field – not just your business.

Are small businesses eligible?

Another misconception is that R&D tax relief is only available to large organisations. In fact, there is a specific section of tax relief that is aimed at smaller company, known as small and medium sized enterprise (SME) R&D relief. You can only claim SME R&D relief if your business has fewer than 500 members of staff, and turns over under €100m (or has a balance sheet under a total of €86m).

What if your project isn’t successful?

Businesses might worry that if their attempts to innovate fail they will have spent a lot of money without getting any kind of tax relief. However, thankfully your project does not need to be successful in order for you to claim. It is only required that you attempt to find a solution. In this sense, a failed innovation can still provide extra capital which could be reinvested.

Is applying for R&D tax credit complicated?

It is true that it can be a little complex getting to grips with applying for R&D tax relief. That’s why many small businesses are choosing to work with knowledgeable tax specialists. If you are interested in learning more about the tax relief that could be available to your business, contact the team at Cooden Tax Consulting today.