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TAX CREDITS FOCUS


Rewarding T


If your business is creating new ways of working then you could benefit from research and development tax relief. Alex Price CTA, Director at ForrestBrown, explains how you can make the most of the scheme


he last year or so has been turbulent for electrical contractors, with the Brexit transition ongoing, COVID supply chain disruption and changing safety regulations. For


SELECT Members, tax relief offers a valuable and established source of funding amid the uncertainty.


Funding recovery Research and development (R&D) tax relief is a government incentive designed to reward UK-based companies for investing in innovation. The latest HMRC research suggests that for every £1 awarded to an innovative company via R&D tax relief, up to £1.28 is stimulated in additional R&D expenditure for SMEs, and £2.70 for large companies. This happens because businesses often spend the benefit they receive on funding the next big push in their R&D work, e.g. hiring new skilled staff, expanding premises, or investing in new machinery. The incentive is split into two parts: The SME R&D tax credit and the large company Research and Development Expenditure Credit (RDEC). The SME credit is worth up to 33p for every £1 spent on qualifying innovation. If your business is investing


£250,000 in R&D each year, you could receive up to £83,375. For many of our clients, it can be much more.


42 CABLEtalk APRIL/MAY 2021


R&D in the world of electrical contracting Innovation in the electrical contracting industry is diverse, taking place among business involved in the design, manufacture and testing of products. In recent years, with the increasing demand for more energy efficient buildings, businesses have had to adapt their processes to become greener. These pressures, along with changing safety regulations, have driven a widescale need for businesses to evolve and innovate.


R&D explained Understanding what qualifies as R&D can be tricky. At ForrestBrown, we find that the following two questions help: ●Are you creating a new product, process or service? ●Are you changing or modifying an existing product, process or service? If you’re not sure if your project is possible, or you don’t know how to achieve it in practice, you could be carrying out qualifying R&D. And if you’ve taken a risk because your outcome was uncertain, this could be R&D too. Your R&D is likely to relate to either


adapting to regulatory change, investments in new systems and improvements, or safety innovations. Examples of qualifying innovation in the electrical contracting sector include: ●Designing or manufacturing electrical wiring and layouts for the installation of control systems


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