R&D tax credits are part of the landscape for manufacturing businesses (as well as others) across the UK. They have been in existence for a number of years now, and can bring tax relief in the form of a reduction of Corporation Tax bill – or even cash directly into a company. The people who invest in companies should have their ear to the ground. But you may find investors that don’t fully understand the impact of R&D tax credits.

It’s unlikely, but some investors may not be aware of the extent of the incentives that R&D tax credits bring. This article will guide readers through benefits that they can explain to current investors or even pitch to future investors – all culminating into financial profits for the business in question.

What Are R&D Tax Credits?

Let’s start at the beginning. If you are unsure about what R&D tax credits are (or what they do) then you will have difficulty explaining them. Your R&D tax advisor or accountant might take care of this part of your business. And this is a great way to operate. But you will need some basic knowledge for investors.

R&D tax credits are a UK government incentive, with the manufacturing industry one of those that have been lined up to receive the benefits. For the record, the average size of a claim we make in behalf of our clients is in excess of £50k.

If a manufacturing business spends money on improving what they do, then R&D tax credits are a distinct possibility. They were set up to reward companies that take a commercial risk. This can come in many forms, with examples like these –

• Developing a brand-new product
• Adapting an existing product to a new size or specification
• Changing processes to become more efficient
• Adding a new price of equipment to the business

As you would expect with the title of the incentive, the research and development part of any of these changes is the part they are interested in. R&D tax credits have been backed by the UK government for a number of years in the future. This means that progressive manufacturing companies can access these for years to come.

Why Do They Matter To Investors?

The true potential of your company is only measured against all potential incomes and expenditures. Looking at the balance sheet of a business only gives a snapshot of where it stands at the time it was drawn up. Looking at the potential to bring in major income from R&D tax credits should be taken into account.

For example, a manufacturing business that hasn’t made an R&D tax claim for the last few years could have a significant amount of money coming their way if a claim is submitted. If an investor could see the potential that this brings then the business becomes a more attractive investment opportunity.

Investors are always looking for value when parting with their money. If you are a manufacturing business owner that speaks to investors, then you should know what the status of your R&D tax credit claims. This will allow you to value the company more accurately.

What If You Don’t Know Anything About R&D Tax Credits?

Now is the perfect time to start learning! We don’t suggest that you become an expert, but you should learn at least the fundamentals. Knowing how to speak to investors about R&D tax credits will help you build a business.

Having information at your fingertips will help you to speak to investors with confidence that you know what you are talking about. Finance is the fuel for many SME’s in the manufacturing industry. It is one of the main issues that the manufacturing sector finds.

Here are some of the basics you should know –

• Whether your company has the potential to make successful R&D tax claims
• The amount of money you think you might be due from these
• Whether R&D is an ongoing part of your business
• When you expect your R&D tax credit claims to be submitted and returned from the tax man

If you don’t know the answers to these, then there is help at hand. LUMO is an expert in R&D tax credits. It’s all we do. That means you get the best service possible. We aren’t an accountant who dabbles in R&D tax credits. We only work on R&D tax. Drop us a line if you have any questions – we’d be more than happy to help.