R&D Tax Credits + Patent Box – Year end tax planning

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Many companies will be fast approaching their financial year ended 31 December 2015. With just six weeks to go, now is a good time to consider tax planning opportunities, such as the availability of R&D tax credits and / or the Patent Box.

R&D Tax Credits Tax Planning Opportunity

With R&D tax credit claims on the increase (23% increase in SME claims last year), more and more companies are beginning to understand the breadth of scope in its application. Also, its generosity (with average UK claims of c£50,000)!

Yet there is more work that can be done, for example, for:

  • those companies that already claiming the relief – many may be underclaiming; or
  • the many hundreds of thousands of companies that have yet to make a claim – perhaps because they (wrongly) don’t believe that they are eligible…?

In either case, we highly recommend that you seek a second opinion from us or another R&D tax specialist firm. It costs nothing for an initial exploratory call – well, in our case anyway!

Patent Box Tax Planning Opportunity

For those companies that hold patents, the Patent Box tax relief might be overlooked as it is relatively new. It applies where qualifying patents are being used in products that are being sold to generate taxable profits. The Patent Box reduces the amount of corporation tax that would otherwise be payable on those profits. The Patent Box is a government tax incentive that is there to support, encourage and reward the inventive and risk-based work that the company has undertaken in order to secure a qualifying patent.

Both of these UK government tax incentives appear to be underclaimed by UK companies – so cash that might otherwise be invested in a company’s growth is being left on the table. The year end is always a good time to revisit all available tax reliefs to ensure that you are doing all you can to maximise the cash available to build and reinvest in your business.

R&D tax credits and the Patent Box might just be the missing festive ingredient…!

R&D tax credits / Patent Box claims timelimits – 31 December 2015

And don’t forget, if you have project work that qualifies for R&D tax credits in your 31 December years ended 2013 – 2014 then you still have time to file a claim for these periods – even if you have already filed your company corporation tax returns (with no claim for R&D tax credits relief).

You can file an amended return – this time including the claim for R&D tax relief.

But you only have until 31 December 2015 to file a claim for R&D tax relief (or the Patent Box) for the accounting period ended 31 December 2013 – otherwise the opportunity for this 2013 period will be lost forever. But right now (i.e. pre 31 Dec 2015), its not too late!