If you want to understand a specific type of tax credit, you may want to start by building a good foundation of knowledge about tax credits in general. When you think about a tax credit, put it in terms of “incentive.” When you report your income, you are allowed to subtract the amount of the credit from the total that you owe in taxes. The value of that credit depends on what category it’s in, with specific types granted to individuals or to businesses in certain industries or classifications.
Tax credits differ significantly from deductions and exemptions, which reduce taxable income. Credits reduce the actual amount of tax that you owe. One example of a specific tax credit is the research and development (R&D) tax credit. This scheme focuses on helping UK businesses by encouraging and rewarding innovation.
Putting it Together
If you understand the basics of tax credits and you know about research and development, your next step is to put the two together so that you can accurately use R&D tax credits. But you don’t have to do this alone because there are experienced professionals who will work with you to reduce the amount of Corporation Tax or arrange for it to be paid in cash credits. These specialists can guide you through the process from the beginning, using their expertise to get the results that you want and deserve.
As a method of reducing tax liability, the tax credit is more favourable to businesses and individuals than deductions or exemptions. The reason? A credit reduces your liability “pound for pound.” For the past few years, many companies have claimed this specific credit to the tune of billions of pounds. But even with this massive amount, most eligible companies fail to claim what they’re actually entitled to. A tax specialist will tell you that the R&D scheme may reward you in cash credits and will emphasise that it doesn’t matter if your activities in this category are successful.
Think of it in terms of your specific business. You could be leaving thousands of pounds unclaimed unless you get help from a professional who is experienced in this field. The plan rewards innovation in science and technology, as one would expect. But the R&D credit scheme can actually be applied in a range of business sectors including engineering, manufacturing, software, food and drink, aviation, marine, medical, electronics, and several more.
If you’ve read this information so far and wonder how a tax specialist can help you save money or pay less money, you’re not alone. When you work with one of the top providers of this special service, you’ll be joining hundreds of other companies who have successfully recovered overpaid Corporation Tax since 2014. You can arrange for a professional to work with your current accountant so you benefit from specific R&D tax knowledge or you can enlist the help of a specialist who will act as your consultant offering advice to your business as required. Either way, you will be guided through the process from start to finish.