Government Grants and Tax Credits
Dreamstake Professional Services Limited have helped over 60 companies recover over £6 million through the Government R&D Tax Credit scheme. The claims are prepared by a team that includes both deep engineering knowledge and broad taxation expertise, steeped in the legislation around R&D tax. Our goal is to remove the overhead from the company of compiling and managing the claim process and we’ll handle any enquiries that might arise from HMRC until the claim is settled. We’ll work with you to identify allowable expenses, write a report on the technical activities and then propose the best tax treatment for your company’s situation, submit the claim on your behalf and manage the process until the claim is settled - including correspondence and any required meetings with HMRC.
In addition to the R&D Tax Credit scheme DPSL can help advise on other Government backed schemes such as Technology Strategy Board grants, Patent Box structures and SEIS/EIS implementations.
R&D tax credits
The R&D tax credit scheme is the best way for small companies to get a large refund on their tech development spend. They can get back up to 32% of their total annual spend.
From 1 April 2012, the tax relief on allowable R&D costs for SMEs is 225% - that is, for each £100 of qualifying costs, your company or organisation could have the income on which CT is paid reduced by an additional £125 on top of the £100 spent. It also includes a payable credit in some circumstances, at a reduced rate.
You can only claim R&D relief if your company is a going concern when it makes the claim and is not in administration or liquidation at that time.
DPSL will help you to maximise your claim by submitting it in the way that HMRC expect to see and by trapping all allowable costs.
TSB’s Smart Grant scheme is the most reliable grant scheme for UK Tech companies.
There are three kinds of Smart Grants available: Proof of Market (£25k, 60% match funded), Proof of Concept (£100k, 60% match funded), Development of Prototype (£250k, 45% match funded). Which one you should go for depends on the stage of the company, its finances, the kind of product it’s looking to develop, etc.
DPSL will advise on your grant application and help with submission where appropriate.
Companies with patentable products can substantially reduce that CT bill by using the Patent Box scheme. This is somewhat similar to the R&D Tax Credits scheme, and in fact is being administered by the same people at HMRC, but it works only for consistently profitable companies. This can result in up to a halving of your CT bill.
The Seed Enterprise Investment Scheme (SEIS) is a tax break designed to help startups in the UK.
This one, however, is not targeted at the companies themselves, but at investors in new companies. If they invest in qualifying companies, they can get a significant tax break - up to 78% of their money back in the year that the company starts trading.
Most startups launching today will want to get SEIS status. Professional investors will often expect it and will disregard a startup that doesn't know whether it will qualify for SEIS. Non-professional investors will be easily incentivised by the promise of recovering most of their money right away.