With technology growing so fast all the time, it is important for businesses to be on the lookout for new innovations and making sure they are ahead of the competition with new and exciting ideas. Should a company come up with new advanced ideas, it may be able to claim Research and Development (R&D) tax credits which are given out by HMRC in the UK in order to encourage businesses to put their time and money into research and development projects.
When it comes to knowing whether you can claim R&D tax credits, here at FI Group UK we are here to support you from start to finish, from advice through to submission.
What Is Innovation in Business?
Companies that innovate undertake the research and development of new products, services, ideas and/or processes to help drive revenue within their business. Innovation should always be part of your strategy to pave the way for creative thinking. It can help create value through new opportunities that increase revenue into any existing channels your organization may have. The creation and development of new ideas within a business keep it relevant in today’s changing world, especially for established companies who may not be innovating at the same rate as others within their industry.
How Innovation Gives Businesses the Edge
Offering a totally new product or service to your customers gives you the edge. If you can listen to what your customers need from you, and how you can improve your offering, there will be many ways that you can bring innovation to your business. It will create trust in your brand and you can develop a loyal following. In some circumstances, you can also patent the product/service so that no other businesses can bring it to market.
What Kinds of Innovation Projects Should Businesses Be Doing in Order to Claim R&D Tax Credits in the UK from HMRC?
Not every company is eligible for R&D tax credits, as there are certain factors that a business must have undertaken to obtain these, including:
Development of technically improved products – If your company is a manufacturer of products and part of your process is to continuously work towards improving the products via experimenting and research, this will be classed as R&D. Whether these experiments work out or not, as a business you are still eligible for the tax credits because of the time spent on these projects.
Improving the quality of your company’s service by creating new software or systems – To gain R&D tax credits, be on the lookout for the latest software or developments that could help improve products or services that should be integrated to keep up with customer expectations.
Improve capacity, performance, and efficiency by improving existing systems – Companies are always looking for new ways to see how they can increase sales, profit and output. If you find new ways to update an existing system to comply with this, it will also help toward getting R&D tax credits.
Develop bespoke solutions for specific issues – Your company could develop software for different businesses that is tailored to their needs to help them resolve issues they have. Producing these kinds of solutions will make a company eligible for tax credits.
Research and Development tax credits are an incentive that the UK government has put in place for businesses, which allows up to 33.35% of a company’s R&D spend to be paid back by the government, so that they are not spending their own money.
Benefits of these tax credits include:
- Cash injection for businesses that they do not have to pay back to the government
- Economic growth for the UK
- A boost in innovation
- The United Kingdom becoming global leaders in Research and Development
What Does Innovation Bring to Your Business and Why Should You Be Innovative?
In today’s technology-driven world, innovation is key for any business. It should be part of your business model, and your drive to bring the best products and services to market for your customers.
Innovation tends to attract talent, ensuring that a company has the top applicants for job openings and, therefore, has the best employees available to work for them.
It helps to get ahead of any disruption that may arise, as innovation will predict where the market is likely to go because of consumer demands. Innovation can also help increase efficiency. A lot of new transformations can be to help organizations save time and become more sustainable.
Here at FI Group UK, we know innovation when we see it. We work with companies that are funding innovative projects and help them to claim tax credits for these. Whether you are just starting out with your research and development as a small business or start up, or you are an established business putting innovation at the heart of your plans for the future, we are here to support you along your journey.
