Research & Development Tax Credits

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If you are in the music industry and run a Limited Company, you may be entitled to funds without knowing. ‘Research and Development’ (normally referred to as R&D) tax credits is a government incentive designed to reward UK companies for investing in innovation bringing a valuable source of cash into your businesses.  

Many companies are unaware of the scheme, so as a business, Excel Payroll Solutions has subsequently expanded the business to assist companies to be able to make a claim. We have supported local and UK businesses throughout the pandemic and continue to seek ways to help them further and now have our own compliant software to support the R&D process.

R&D Tax Credits or R&D Tax Relief enable companies to either reclaim tax paid, reduce tax paid, or in the case of loss-making companies to surrender losses for generous tax credits. On a simple level they bring a cash injection for R&D work already done. Not claiming R&D tax relief, means missing out on financial rewards, adding value for your company. The R&D government scheme is there to encourage innovation, it means businesses could claim thousands in the form of a corporation tax rebate. While there’s good awareness of the scheme among larger organisations, the same does not apply as much for many SMEs.

Examples. Research and development occurs across a wide range of sectors and industries, and in companies of all sizes. These range from intensive R&D industries that rely heavily on R&D projects like pharmaceuticals, life sciences, software, construction and of course the music industry is either linked or leads on it’s own, with technology to areas like manufacturing, engineering, software development and teaching innovation.

Why this matters. If your Limited company invests money into developing new products, processes, services or enhancing existing ones, it could be eligible for R&D Tax Relief or a cash credit. R&D exists in every single sector and if claiming for the first time, you can typically claim R&D tax relief for the last two completed accounting periods.  The claims also apply to companies who are not yet in profit, or who have stopped projects.  The scheme even covers failed projects. The UK government recognises that for every £1 reimbursed, £7 is generated back into the economy which is why the scheme exists.  If you spend around £50K in research and design, you would typically claim £13K in tax relief. Some examples of eligibility are below.

Qualifying criteria Examples for the music industry
developing new systems  

 

 

Software, app development, instrument development, music therapy,

Teaching styles/initiatives, adaptation

developing a new product
developing a new process
creating certain computer software
a new method of development
a new method of production
customised or adapted systems

We would need to ask five questions to qualify you for this initiative:

Question set Example of an answer
What Initiated the Project? The problem to solve
What technical challenges/uncertainty have you faced? Design, cost, technology
Was there a lot of trial and testing/prototypes? Yes
Was there a Journey? Yes
How much have you spent on a given project?

 Qualifying expenditure within these projects are:

  • 65% of subcontracted costs. These can be included here in the UK or overseas providing the costs have been paid out of a UK Company account.
  • Staff costs/salaries, pension contributions, and director loans.
  • Consumables/materials & utilities: electric, water, gas, fuel.
  • Travel expenses providing its paid for from a personal account.

For additional information please visit our website: www.excelpayrollsolutions.co.uk/research-development-tax-credits/

Our service includes:

  • No obligation business assessment
  • R&D report completion
  • Technical CT600 assistance
  • HMRC Enquiry insurance included
  • We charge our fee as a percentage of the net benefit you receive.
  • You only pay after you’ve received your payable credit and/or Corporation Tax reduction.