Ask yourself: Has our company built a software technology from the ground up? Have we constructed a technology solution? Has it overcome technical challenges in the build?
If the answer is “yes” to just one of these then you should investigate whether R&D tax credits can help.
In a nutshell, R&D tax credits are an initiative by HMRC to reward the research and development of innovative technology products. The best part is that they work whether your business is profitable or not, and you can claim up to two financial years historically.
Up to 33 per cent of your “qualifying costs” can be recovered – which means things like money spent on developers, engineers, prototype materials or any outlay supporting your R&D activities – in essence bespoke technical solutions.
What does this look like in real terms? For many small businesses looking to scale, R&D tax credits offer a speedy cash injection to be used for anything from expanding your product range to increasing your marketing efforts, making a new hire to increasing office space.
Read more about R&D tax:
- The benefits of R&D tax relief versus grants
- How can you tell if your company will qualify for R&D tax relief?
- R&D tax credits: What you need to know
Below is a snapshot of three very different businesses who are making R&D tax credits work.
(1) Pact Coffee
Based in Bermondsey, Pact imports the finest quality coffee beans from around the world. It roast them on-site and delivers them all over the country to ensure customers have top quality, fresh beans through their letterbox.
What did it do? Not only did Pact need to manage and deliver potentially thousands of orders, it also had to do this in enough time that the beans would still be freshly roasted. Focusing on the quality of the end-product for the consumer, it wanted to invest in R&D to research and build a bespoke and effective logistic operation and back-end technology in-house.
How much did it claim? Pact claimed back 28 per cent of its development costs
Result: Using the extra R&D tax credits cash that had been claimed back, Pact has not only developed a highly-bespoke and effective logistic operation and in-house back-end technology, it has also diversified its product range. So now, alongside providing freshly-roasted coffee beans, it has launched a new range of Nespresso-compatible coffee pods, straight to the door of hundreds of coffee-cravers everyday.
HighSkillz provides game-based training solutions and gamification of processes towards behaviour change. It creates learning games to increase and accelerate competence development personalised to the needs of the individual and the organisation. As such, it has intensive research around game-based development and gamification.
What did it do? Through its targeted research technique, HighSkillz wanted to isolate instances and scenarios where skills such as sense-making, critical thinking and communication are particularly important e.g. in manufacturing. Its aim was that the “player” would hit the ground running in a real-life environment and be able to communicate more directly and effectively in a much shorter space of time than they otherwise would have.
How much did it claim? HighSkillz claimed back 19 per cent of its development costs.
Result: HighSkillz prides itself on having grown organically, with no help from investors or banks and its has big plans for its R&D tax credits cash. It wants to reinvest it in developing its current platform, making changes to improve the user experience and responsiveness so the user will learn even more effectively what they need in the shortest time possible.
(3) Grub Club
Grub Club is a curator of dining experiences. It matches up chefs and under-used venues (e.g. out of hours cafes) to bring a culinary experience like no other – for instance a pop-up restaurant in the St Pancras Clock Tower or a chef’s table experience on the chef’s own home kitchen table!
What did it do? In order to provide a slick, agile experience for its customers and chefs alike, Grub Club needed to create a slick, agile platform on which customers could book. It invested in building in-house products, which would solve its unique needs, and now has over 400 chefs on its books.
How much did it claim? Grub Club claimed back 28 per cent of its development costs.
Result: Using the cash from its R&D tax credit claim, Grub Club now plans to invest in improving its existing tech to identify further underused venues and chefs, along with a marketing push to increase sales.
As any business owner knows, an extra boost of cash can make a real difference to a company’s potential, supporting investment in a new product or service, or bridging the gap between funding rounds. So if you have invested in developing high-level technology software, R&D tax credits could be the not-so-secret solution to helping your business grow.
Furthermore, Brian Williamson suggests that tax credits can help boost cashflow among innovative SMEs.
Pippa Clark is the marketing manager at GrantTree. Learn more about boosting your cash flow with R&D tax credits.
Learn more about boosting your cash flow with R&D tax credits
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