Accountancy and investment management group Smith & Williamson has launched a free tax calculator to enable businesses to work out how much tax they could be saving on their research and development (R&D) costs.
The online tool has been set up in the light of research suggesting that thousands of businesses could be missing out on valuable tax breaks for their R&D that could help to fund IT development and technological improvements.
The HMRC report published in March revealed these businesses could receive cash repayments of up to 33% for qualifying R&D expenditure. 
Dave Mouncey, pictured, a tax partner in Smith & Williamson’s 170-strong Bristol office, said the main issue was a general lack of awareness among businesses of what actually constituted R&D and which of their activities fell under this broad umbrella.
“Our aim is to reach out to SMEs across all sectors to help them identify innovations which may qualify for potentially significant R&D tax breaks,” he said.
“For example, we see businesses investing large sums into developing IT systems for themselves or others, and yet many are unaware that the costs associated with this work may qualify for tax relief under the R&D tax regime.
“We have seen that the number of claims by SMEs in the finance and insurance, construction, real estate, arts and health sectors are particularly low. However, where successful claims have been made by firms in these sectors, the average sums received have been among the highest, so we believe there may still be considerable scope for others to claim.
“The take up by sub-contractors is also low, again suggesting there is little awareness of the opportunities. Interestingly, two-thirds of the total amount claimed came from companies registered in London, the South East or the East of England.
“This regional concentration is surprising given the vast amount of manufacturing based outside this area, pointing to a lack of awareness of R&D tax breaks in other regions, including the South West.”
Businesses that may be eligible for tax relief on past R&D expenditure are urged to act quickly. Claims must be submitted no later than two years after the end of the year in which the money was spent.
SMEs can benefit from an enhanced rate of R&D tax credits compared to larger businesses. Loss-making SMEs are now eligible for a repayment of up to 33% of qualifying expenditure, where those which are in profit can claim a tax credit of 46% of qualifying expenses.
For an immediate indication of how much your business could claim in R&D tax credits, visit www.smith.williamson.co.uk/r-and-d-tax-calculator
For further information, contact Dave Mouncey or Gina Hetherington in Smith & Williamson’s Bristol R&D tax team on 0117 376 2000.
