Why SME R&D Tax Credits Are More Important Than Ever In 2020

1. Why SME R&D Tax Credits Are More Important Than Ever In 2020 The history books will undoubtedly record the 2020 as one of - if not the - most difficult and truly horrendous years in living memory. From the devastating effects of the COVID-19 pandemic and the millions who have tragically lost their lives to the novel virus, to the seemingly never-ending cycle of violence and hatred bred by ignorance and prejudice, 2020 has truly been a year to forget. Alongside the obvious human tragedy of the COVID-19 pandemic, however, the effects on business have been equally devastating. This is particularly true of SMEs (Small to Medium Enterprises), who lack the safety net which other, upon which larger organisations may have been able to fall back at this trying time. SMEs are, by their very definition, smaller entities and, for many, their output and contribution to the fields of science, technology, engineering, and other, similar innovative sectors bely their relative size and status. It is these precise companies, the innovators, those who think outside of the box and create new and exciting products and processes for whom SME R&D Tax Credits could literally prove the difference between survival and closure. SME R&D Tax Credits Explained In 2000, the UK Government introduced the Research and Development Tax Relief scheme, of which the SME R&D Tax Credits initiative forms an integral part. The guiding principle behind this strategy is to help the innovators, the creators, and the visionaries of UK industry, by covering a large proportion of their research and development costs, even if the project ultimately fails to come to fruition. Examples of such forward-thinking SMEs would be the pharmaceutical or biological research firm who are currently working night and day on finding the solution to the COVID-19 pandemic, the programmers and engineers whose chips and boards will be in every self-driving car in the years to come, or the software developer who will one day create the next world-changing social media platform.

2. Any business which employs fewer than 500 staff, and can demonstrate either an annual turnover of less than 100 million Euros, or can show a balance sheet of less than 86 million Euros is classed as an SME, and is therefore eligible to apply for an SME R&D Tax Credit should their work meet certain criteria. In financial terms, this means that a profitable SME is potentially entitled to claim up to 230% of their qualifying costs (the standard 100% plus an additional 130% via the scheme), and even loss-making SMEs can request a research and development tax credit of up to 14.5% of their surrenderable losses. What Do SMEs Need To Prove? Should an SME wish to apply for the SME R&D Tax Credit, they will have to demonstrate that they can fulfil a set of criteria laid out by the Government. While these can be fairly complicated and quite stringent in places, any business whose work is genuinely innovative and can be shown to be pushing the frontiers of science and technology should have no problems during the application process. For example, in order for a business to successfully apply for the SME R&D Tax Credit, they must be able to demonstrate that the project in question is either directly related to their existing trade and/or field, or will eventually form a new arm of the business should the project be a success. A further example of the required criteria would be the stipulation that the product, service, or process to which the research and development relates is truly an innovation in the context of the wider market or field of study, and is not merely new for that particular company. How Can Areande Help? Just as the guiding principle of the SME R&D Tax Credit scheme is to lend a helping hand to businesses to facilitate their potentially world-changing innovations, the fundamental tenet which guides Areande is to assist the very same businesses to obtain the funding in the first place. As with many such initiatives, and any Government-led scheme relating to both taxes and finance more generally, it is sometimes easy to become overwhelmed by the complexity of the application process, and potentially lose sight of the end goal among the minutiae and the small-print. It is for this very reason that Areande created the application portal, by which an SME can begin the process of claiming their entitlements by providing a small number of details about their company and their project via a simple and self-explanatory online form. Upon completion of the form, Areande’s dedicated and highly-skilled team of account managers will then work on behalf of the SME to follow the claim through to its conclusion, working in close partnership with the SME at all times throughout the process. By utilising the services of Areande, not only could an SME secure the additional financial support which is arguably more important in 2020 than it has ever been before, but the process itself is streamlined enough to allow talented staff all over the UK to delegate potentially time consuming paperwork and bureaucracy, and instead concentrate on innovating, breaking new ground, and changing the world for the better.