Tag Archive for: R&D Advance Funding

Accelerating r&d tax credit funds with R&D Advance Loans

Where to Start with Your R&D Tax Credit Application

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Navigating an R&D Tax Credit application can initially appear overwhelming. With a large amount of information and criteria, knowing where to begin is often the biggest hurdle. This guide will break down the process and help you identify the starting point for your application.

What Are R&D Tax Credits?

R&D Tax Credits are a UK government incentive designed to encourage companies to invest in research and development. They offer a valuable source of income to businesses, reducing their tax bill or awarding cash repayments. Qualifying R&D activities can range from developing new products to enhancing existing processes. It’s not just about ‘white coat’ scientific research but also developmental work in design, engineering, and software.

The Benefits of Claiming Tax Credits

  • Financial Boost: You can reclaim up to 33% of your development expenses as a cash rebate or a deduction on your corporation tax.
  • A Market Advantage: Invest in creating new products, services, and systems to stay ahead of the competition.
  • Have Ownership: Fund your innovation without giving up any stake in your business.
  • Easy Access to Funds: Compared to other innovation financing methods like corporate loans or venture capital, R&D Tax Relief is more readily available.
  • Quick processing: Receive your cash rebate or tax deduction as swiftly as 28 days post-filing or even 12 months earlier if you opt for our Advance Funding service.
  • Two-Year Window to Apply: HMRC permits businesses to claim tax credits for R&D activities up to two years past the end of the relevant financial year.

Where to Start

Beginning your R&D Tax Credit application can feel daunting. Start by asking yourself these questions:

  • Are you a UK-registered business that is liable for corporation tax?
  • Is your company working on projects in a field of science or technology and projects and activities that help resolve scientific or technological uncertainties?
  • Is your company working on one or more research and development projects?
  • Were these uncertainties overseen by an expert?

It’s important to note that this isn’t limited to traditional ‘white coat’ scientific research; it also encompasses ‘brown coat’ development activities in fields like design and engineering, where challenging technological issues are addressed.

Qualifying activities span various sectors and can include:

  • Developing innovative software
  • Engineering design projects
  • Pioneering new construction methods
  • Advancing bio-energy and cleantech solutions
  • Exploring novel approaches in agri-food as well as life and health sciences.

If you answer yes to the first set of questions and your project falls under the qualified activities, gather detailed records of the costs involved in these projects. These costs should be:

  • Staff costs
  • Materials
  • Utilities
  • Software

However, costs that cannot be covered by the R&D are:

  • The manufacture and distribution of products and services.
  • Investment in assets under either of the R&D relief schemes isn’t typically covered. Nonetheless, a favourable 100% Research and Development Allowance might be applicable to capital investments like equipment, machinery, and buildings utilised in R&D activities.
  • The expense of acquiring land.
  • Costs related to the utilisation and establishment of patents and trademarks, as these expenses are associated with safeguarding the finalised R&D.

Common Pitfalls to Avoid

A common pitfall is misunderstanding what constitutes R&D. Remember, it’s about seeking advancements and overcoming technological uncertainties. Over-claiming or under-claiming are both detrimental. Ensure your claim is accurate and reflects your genuine R&D activities. Avoid vague descriptions; be specific about the innovations and challenges your project addressed.

Seeking Professional Help

While it’s possible to navigate the R&D Tax Credit process independently, professional advice can be invaluable. Our Innovation Term Loans or R&D Advance loans are a great way to accelerate your innovation funding.

From maximising your claim to needing simple guidance, contact us and make the most of your tax claim.

r&d tax credit loans

Are you eligible for R&D Tax Credit Loans?

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R&D tax credit is a UK government initiative that is designed to encourage innovation – and reward those companies that are investing in it. R&D tax credit loans help your business’s cash flow by providing greater levels of control/access to this capital. Rather than waiting for cash to be received as part of this process, R&D tax credit loans provide an upfront advance so that this can be accessed now.

How to Claim R&D Tax Relief

R&D tax relief is claimed through the process of submitting a corporation tax return on behalf of the company at the end of the financial year. It’s possible to still make a claim up to two years after the end of the financial period that the claim relates to. Once the claim has been agreed by HMRC then the process of delivering the funds can be started.

How can you get R&D Tax Credit Loans?

Your business will need to be eligible for R&D tax credits. This type of tax relief is generally available to businesses that are carrying out innovative activities that are designed to develop new products or services – or enhance existing ones. Success with R&D tax credits requires that an activity is part of a specific project that is focused on science or technology and that its goal is to try and create an advance in knowledge or capability that resolves a current uncertainty.

Once you have done this, R&D advance funding can give you greater access to capital on an ad hoc, quarterly, or annual basis – it’s entirely up to you and what works best for your business.

Two key criteria for eligibility

● Activities that qualify. If you’re going to be successful with R&D tax credit loans then the R&D activities that your business is paying for need to be eligible for R&D tax credits. There is a long, and specific, list of the types of activities that this funding is designed to encompass. These include new process creation, research (e.g. discovering the right materials, solutions or requirements), routine analysis, improving current processes or creating an advance, developing and testing new products and prototypes, creating new services that compliment existing capabilities, testing and developing technological advances.
● Costs that qualify. The costs that will be covered by R&D tax credit loans include certain types of expenses that relate to R&D. For example, project management fees are included as well as the staffing costs of any staff that are working on the project. Other costs that qualify include outsourced or external workers – such as contractors or freelancers – the software costs of a project and the materials and utilities that the project has used. It’s worth noting that staff costs are often one of the biggest costs in R&D.

Which industries can apply for R&D Tax Credit Loans?

There is no specific industry requirement and this is not limited to obvious R&D areas like technology. In fact, businesses from any sector can – and have – successfully applied for R&D tax credit loans.

SPRK Capital: We’re here to help

R&D Tax Credit Loans make it easy to access the cash you will receive via R&D tax credits sooner, rather than later. We understand the process can be daunting, so why not reach out to us? Our trusted advisors will get you on the right track towards maximising your business’ financial efficiency.

Sprk Capital announces David Brennan to it's board of directors

SPRK appointment to Board of Directors

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SPRK a deeper understanding

Sprk, the leading Fintech lender focused on R&D advance funding in the U.K., is pleased to announce the appointment of David Brennan to its Board of Directors.

David brings a wealth of knowledge on successfully building and scaling lending platforms.

He was the co-founder of Radium Capital along with Sprk Chairman Tony Brennan, currently the largest R&D loans business in Australia.  Following its scale-up, David also oversaw its subsequent sale in 2019.

With a history of Fintech innovation David founded Enably, Australia’s first fully automated online lending platform offering personal loans through a digital experience.

Following the growth of Enably, David founded Kikka Capital, an online lending platform offering small businesses lines of credit to run and grow their business.  Kikka was subsequently floated on the stock exchange.

In 2015 David was announced as the AICM WA Young Credit Professional of the year and nominated for the 40 under 40 award.

Dom Peasley, CEO Sprk said, “We are incredibly fortunate to have David join the board of directors of Sprk.  David’s valuable input in scaling lending businesses will help us as we continue to take significant market share in our U.K. lending markets.

His focus on execution of growth plans will ensure that Sprk maintains our mission of providing speed, simplicity and transparency of finance to companies innovating in the U.K.”

David Brennan, Director Sprk said, “I am thrilled to join the board of Sprk, building on my experience in other Fintech companies I founded.  It’s my belief we have the strongest team in place to execute on our vision of being the go to lender when any company thinks of advancing their funding of R&D or Grants in the UK.

I look forward to imparting my knowledge and experience to the team and actively assisting it its growth plans going forward.”

 

About SPRK:

SPRK provides SMEs the ability to access cash sooner from their eligible R&D spend or Innovation Grants using its proprietary online platform, ensuring credit decisions are made swiftly with certainty of funding.

Providing loans of up to £1m+, SPRK’s unique proposition is designed to optimise cashflow for borrowers through a non-dilutionary source of capital without charging upfront fees or ongoing interest payments.

SPRK offers the ability for companies to borrow against their eligible R&D spend at any point in the financial year or their expected Grant payments, a first for the UK market.

Working through a dedicated network of SPRK Approved Advisors, we ensure that SPRK partners with high quality firms who can provide expert advice to our borrowers.

 

SPRK Capital
Dominick Peasley
0800 0025 100

R&D Advance Funding: How it can benefit your business

R&D Advance Funding: How can it benefit your business?

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R&D Tax Credits can make a big difference to cash flow for many businesses. The process of R&D Advance Funding ensures that any organisation can access a future tax credit earlier in the year. This means that the funds that are freed up via R&D Tax Credits can be accessed at the most critical time for your business, creating a source of income that is available to be invested at a time when it is most needed.

 

How does it work?

 

R&D Advance Funding essentially uses the future tax relief payment from HMRC as collateral for a loan facility. The loan, fees and interest will be repaid when HMRC makes the R&D Tax Credit payment further down the line. The process of applying for R&D Advance Funding is fairly simple and involves looking at whether your business is eligible for R&D Tax Credits as well as the general financial health of the business. For any business going through this application, there will be a requirement to prove that development costs fall into the right categories and that the project is eligible.

 

When is the funding available?

 

It can be accessed at any time during the financial year. Most R&D Advance Funding will require at least three months’ worth of development spending on at least one project or technology that falls within the eligibility criteria. The funding is paid directly to your business as a loan and then repaid by HMRC later in the year through the R&D Tax Credit mechanism.

 

What are the benefits of R&D Advance Funding?

 

  • The opportunity to invest more in R&D – Research and development is vital and the cycle of R&D Advance Funding helps to ensure that the more your business invests now, the more funds it will have available to continue doing so in the years to come. For example, funding can be used to hire developers and engineers and those costs can then be used to create an additional claim.

 

  • There are no limits on what the loan can be used for – Whether it’s technology or marketing investment, your business can use the funds where they are needed most.

 

  • An additional source of growth funding, available now – Especially for early-stage companies, funding can be a complex process that often means giving away a degree of control and/or waiting for complex equity rounds to close. Using R&D Advance Funding allows your business to use its innovation and intellectual property to get straightforward growth funding that doesn’t come with the high costs of something like equity sales.

 

  • Push through the bottlenecks – Many business owners and founders know exactly where they need to go next when it comes to development and growth but the issue is funding. R&D Advance Funding provides a way to plan cash flow and make strategic investment decisions that will help to drive the business forward.

 

There are clear benefits for any business interested in using the SPRK Capital process of R&D Advance Funding. If you’d like more information about the SPRK Advance, to find out if you’re eligible, or how much capital you could access, then please click here.