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?
R&D Tax Credit
Perhaps the biggest tax relief available to businesses that are being underutilised is the Research and Development Tac Credit. This scheme was set up back in 2000 by the government to encourage research and development across the country by giving 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 work qualify?
Many fintech companies think their work doesn’t qualify but the very nature of the ‘tech’ side of the business 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! But 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 can you claim for?
The other main question is what can companies claim for in regards to this R&D project? The main thing 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 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. Yet in the year 2016-17, there were over 34,000 claims under the scheme and the payments totalled some £1.8 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 RnD 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 their 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 – 0800 195 7516