Finance

Small business owners can get rewarded financially for innovative projects

Are you a small or medium enterprise and have developed an innovative product, service, or something new in your field?

Then you could be eligible for thousands of pounds in tax relief – even if your project has been unsuccessful.

When it comes to recognising innovation and entrepreneurship, research and development (R&D) independent tax consultancy, EY Breakthrough Incentives, believes Swansea is leading the way.

So much so, the firm which specialises in supporting SMEs accessing R&D tax relief now has a dedicated team to work alongside Welsh businesses.

Newly appointed associate director, Sadique Maskeen, said he is passionate about helping businesses understand and claim back “Cash for Innovation”.

To show its commitment to the region, the firm is sponsoring the Lifetime Achievement Award at Swansea Bay Business Awards 2021 at the Brangwyn Hall on Thursday, October 21.

Sadique, who has more than 25 years of experience in working for corporate organisations, answers the following questions about the meaning of R&D and the implications around tax relief.

What is the R&D tax regime?

EY Breakthrough Incentives associate director Sadique Maskeen

It is a government incentive scheme that is designed to encourage companies to undertake research and development activities or R&D as it’s commonly known. It is a valuable source of cash for businesses to invest in accelerating their R&D, hiring new staff and ultimately growing.

There are two different R&D tax schemes – the large company scheme and the SME scheme. The scheme a company is eligible to claim under will initially depend on its size, that is, whether it is an SME or a large company.

What qualifies as R&D?

There is a specific definition of R&D for tax purposes, which is often more far-reaching than most people expect it to be. The work that qualifies for R&D relief must be part of a specific project that aims to make an advance in science and technology and is relevant to your company’s trade – either an existing one or one that you intend to start following the results of the research and development.

To get R&D relief, you need to explain how a project:

  • Looked for an advance in science and technology
  • Had to overcome uncertainty
  • Tried to overcome this uncertainty
  • Could not be easily worked out by a professional in the field

These projects may include research or development of a new process, product or service, or improving on an existing one.

What costs qualify for R&D tax credits?

There are specific categories of qualifying spend. These include staffing costs, contracted out R&D, externally provided workers (for instance, agency workers), consumables, utilities, software, and payments to the subjects of clinical trials.

With companies having two years to submit a claim from the end of their accounting period, the qualifying spends in an initial claim can be quite sizeable.

What are the benefits of R&D tax credits?

As a form of innovation funding, R&D tax credits can transform your business. At EY Breakthrough Incentives, we are passionate about helping innovative companies realise the full potential of R&D tax relief so that they can grow. The government benefits from increased productivity which is good news for UK businesses, and good news for the economy. It can also lead to innovation that can affect positive change on a global scale.

Who are EY Breakthrough Incentives?

In 2020, EY acquired Breakthrough Funding Ltd, a UK-based research and development independent tax consultancy, which specialises in supporting companies accessing R&D tax relief through the small to medium size scheme. The deal, which underlines EY’s continued commitment to the SME market, saw the Breakthrough Funding Ltd team become an integral part of EY’s Innovation Incentive R&D tax team, under the new name EY Breakthrough Incentives. The firms client base are mostly privately-owned SMEs.

How can the company help Welsh businesses?

Manager director Brady Last was in a position to expand the business throughout the UK and was particularly keen to integrate the business into the Welsh communities, becoming part of the SME network and creating awareness of much-needed and deserved funding for the region.

She said: “Seeing the obvious innovation and entrepreneurship across so many sectors means this is a great opportunity for us to work with businesses in Wales. Having a dedicated team to work alongside Welsh businesses is of paramount importance, so we can ensure authentic, organic, and long-standing relationships can be built.”

If you think could be eligible for R&D tax incentive, visit the website or email [email protected]

Small business owners can get rewarded financially for innovative projects

For more information about the Swansea Bay Business Awards, including how to get tickets, visit the website here

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