Regardless of the financial health of your business, there is always the desire to save a little money where possible. Perhaps one of the most satisfying ways to save a little money is in the form of tax relief – either paying less in taxes or getting money back. There are schemes available that can help fintech companies do just this but many are missing out. So how do you know if your company is eligible?
The R&D tax credit scheme
Perhaps the biggest tax relief scheme available to businesses that is being underutilised is the research and development tax credit. This scheme was set up in 2000 by the UK government to encourage research and development across the country. The scheme provides a substantial tax relief to qualifying project costs.
The HMRC R&D tax credit scheme currently has two tiers – small and medium enterprises (SMEs) and large companies. For SMEs, the amount of credit they can receive for the work that they are doing is effectively up to 33% of the costs.
SMEs are qualified as businesses with less than 500 employees and an annual turnover of less than €100 million or a balance sheet of less than €86 million.
Does your fintech company qualify?
Many fintech companies believe their work does not qualify for R&D tax relief. However, by the very nature of the ‘tech’ side of the business this means they are potentially on the list of qualifying projects. One of the main criteria for qualifying projects is that they are in the area of either science or technology. This means the development of new technologies or the advancement of existing tech can both qualify under the scheme as long as they meet the other criteria.
The project does need to be in the area that the business operates in. So a fintech company likely wouldn’t start working on a revolutionary new recipe organising software! However, if the project is a clearly defined one with aims and processes and is in the area that the business works in, then there is a good chance that it can qualify. The people working on the project also have to be qualified for the task, not simply slotted in to fill out the numbers.
What R&D can a company claim for?
One of the main costs which a company can claim for is the cost of salary for any members of staff working on the project. If they work 50% of their time on the project and 50% of their time on something else, then only the half spent on the project would qualify. Under the same definition, you can claim for materials used in the project, power and other utilities consumed for the project and even the cost of software or hardware purchased solely for the purpose of the research project.
Why companies are missing out on tax relief
On the surface, this might seem like a specialist tax relief that doesn’t really apply to a fintech company and this is why many companies are missing out. In the year 2017-18, there were over 42,075 claims under the scheme and the payments totalled some £4.3 billion. So how do you know if your company can qualify?
One of the easiest ways is to engage the services of a company such as Easy R&D to assess the research and development work your company is doing and see if it qualifies under the scheme. As experts in the field, the company can quickly look at what qualifies and what costs you can claim for, even processing the claim. Many of our clients receive a tax relief settlement in as little as six weeks.
You will need some basic information about the projects that might qualify under the scheme for them to carry out the claim. Questions such as ‘how do I find a company registration number’ can also be answered by them to help you prepare for your claim. And within a short time, you can know if you are due the relief and can be saving money for your company.
Easy R&D have helped hundreds of companies to make R&D tax relief claims. Contact your nearest R&D Consultant to see if you can claim on 0800 195 7516.