R&D Capital Allowances release cold hard cash into your businesses by allowing you to write down your R&D spending on fixed assets. RDA is not capped, and it can be claimed up to two years in arrears. What else do you need to know? Lumo has you covered.
If you have a business, then there is a good chance you have spent money on capital items over the last few years. If you have, then this will help you to understand there is more money in them than simply what they produce for the business. If you haven’t, then read on anyway – you never know when you’ll next spend money in your business on a capital item. This article will look at what you need to know about R&D capital allowances and what they mean to you.
If you have invested money in the premises of your business over the last few years, then there is a chance you have an R&D tax claim. If part of the work was linked to developing a new space to carry out research and development, you almost certainly have one. We are finding that many businesses are investing in R&D on a regular basis. This often prompts them to look for bigger or more suitable premises to operate from. There are many reasons to relocate.
Capital expenditure like this can make a huge difference to the final figures you present to the HMRC. And we all want to make the most of this, having as many allowances as possible so we end up paying less tax, legally.
A New or Updated Software System
Software is one of those things that causes much debate in R&D tax circles, as many think you can’t make a claim for it. The fact is that the software itself isn’t always the reason you make a claim. It is the way the software is developed that is more important for R&D than the solution it delivers.
For example, if you come up with a database, then you might think that this isn’t true innovation because there are fully developed databases all over the world. But if you have had to adapt the database to fit your business, make changes and solve problems then this is what will make it count as an R&D tax claim.
This is often a tricky one, so drop us a line if you want to talk about it and we can run with it for you. We have a 100% success rate when submitting RDA for software to the tax man. Well, we have a 100% success rate submitting claims full stop. Speak to the experts.
New Machinery, Equipment, Fixtures or Fittings
This can be another big one. If you change the way you do things, or make something new, then there is a good chance you need new equipment to make this happen. In addition, you might need new fixtures and fittings. The same goes if you adapt what you are already making. The idea stage, the concepts, the prototypes and all the other things that go into this are eligible for R&D tax credits.
But it is with the capital allowances that you can often make the most significant difference to your bottom line. All the new kit you buy to make these changes is eligible and can significantly reduce the Corporation Tax you pay.
And There May Be More
Other items might be able to become part of your R&D Allowances. Items such as company cars for R&D staff and laboratory equipment can be made part of a claim if you submit the report correctly. Remember when dealing with the HNRC it is all about being open and honest. The better information you give them, the easier they will be able to make a decision. If you are unsure about whether to include a certain item, then stop and take a little time to make sure you are doing the right thing.
Asking an Expert
If you don’t have the time for this, then call on someone who does. We deal with nothing but R&D tax claims, day in, day out. That means you get to rely on our expertise, not guessing if you have understood tax law correctly. We work with your exiting accountant if you like to get the figures sorted out and then submit. All you need to do is wait for a call that tells you the cash is on its way.