Business Tax Tips for 2016/17 – Tip 3 – Research & Development


Welcome to our series of Business Tax Tips for 2017. We’ll be giving you 5 of our best tips to cut your tax bill in the year to 31 March 2017. In Part 3, we’ll talk through how Research & Development could save you tax, even if you don’t think you’re doing it.

Now, you might think “they’re not applicable to me – I don’t have some sort of laboratory”. However, they can be relevant to a lot of businesses.

So – what actually are they?

Research and Development tax credits allow you to claim additional tax relief if you have spent money on research and development. For every £1.00 you spend on R&D, you can claim £2.30 of taxable expenses in your tax return.

What that actually means in cash is that for every £1 you spend, your corporation tax bill is reduced by 46 pence, ie it only costs 54 pence of your own money to spend £1 on R&D.

The key thing is are you doing any? You may think you aren’t….. but you actually are. It doesn’t mean you have to have people in laboratories, wearing white coats. But it does mean developing something new or faster, bigger, smaller. Or different systems for doing things.

An example is in the travel industry. A business claimed R&D credits but they didn’t need to invent a plane or something. They actually just implemented a new way of taking customer bookings on their website – this was eligible for the credit and got additional tax relief.

My tip today is to have a think about it and if you’re unsure think whether something you’re doing could be something new and could be relevant for the credits……talk to an expert.

So that’s my 3rd business tax tip for this year.

I’ll be back next week with some ways to cut your tax bill when you have staff.

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Any questions?

If you’d like a meeting or a Skype call with a Liverpool accountant to discuss this, please give us a ring on 0151 380 3800 or drop us an email at [email protected].

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Added by Jon Davies
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