Tag Archive for: R&D Tax Credits

Supporting Innovation in the SME market with R&D tax credits

Supporting Innovation with tax credits: R&D for SMEs

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Whether your business is a start-up or a growing SME, supporting innovation with tax credits can be a vital resource that support the ongoing growth of a business. The scheme was created more than two decades ago and has provided essential support to businesses at many different stages of development. Crucially, for SMEs and early-stage businesses, an organisation doesn’t have to be profitable to be eligible for R&D tax credits, as this is available to loss-making companies too.

 

R&D tax credits – the SME scheme

 

There are two schemes available under R&D tax credits, a scheme that is available for larger limited companies and one that is designed for SMEs. There are a number of factors that will make a business eligible under the SME scheme, including:

 

  • No more than 500 staff
  • A turnover of less than €100m or a balance sheet total of less than €86m
  • Eligible R&D activities

 

Depending on the business and its activities the rate of relief that can be claimed can be as high as 230%, which means that for every pound spent on R&D activities there is the potential to reduce tax liability by 44p. Where the business is not yet making a profit, this can be carried forward and set off against future losses – or surrendered for a cash tax benefit.

 

Incentivising businesses to take risks

 

Innovation requires a certain appetite for risk and this can be eroded by challenging financial circumstances, such as those that we have seen during the pandemic and which continue to dominate now. R&D tax credits provide a way to incentivise businesses to take more risks by benefitting from greater investment in R&D activities. There are a number of different categories of expenditure that can be claimed under the R&D tax credits scheme, including software, employee costs, utilities and materials. It’s also possible for small businesses to claim for the costs of subcontractors and external agencies in some circumstances. There are also a few categories of expenses that can’t be claimed for and these include patents and trademarks, land purchases and the production and distribution of goods.

 

Funding research and development

 

HMRC’s definition of research and development is intentionally broad and includes any project that is focused on overcoming something technically difficult, advancing science or technology. This is essentially all about overcoming existing limitations, especially when it comes to technology. There could be many different reasons for investment in R&D, from the desire to make products cheaper to speeding up a process. However, that doesn’t limit the availability of R&D tax credits to new technology or science sectors – anything that is technically difficult and looking to achieve a different result will be likely to be eligible.

 

R&D tax credits are an effective way for the UK government to supporting innovation with tax credits – and provide a way forward for innovative firms looking to make a difference.

 

SPRK Capital can help you access your R&D tax credits quicker with a SPRK Advance. Find out more about the SPRK Advance and how you can make your R&D expenditure go further here.

 

Alternatively, get in touch with a member of our team. We’d love to hear from you.

 

R&D Tax Credit Loans VS Business Loans

R&D Tax Relief VS Business Loans

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Business financing can be a real challenge for SMEs and start-ups. Especially in the early stages of development it’s difficult for enterprises to secure attractive financial investment and many will opt for business loans instead. However, the reality of traditional business loans is that they can be expensive and there may be other much smarter options available. One of those options is R&D tax relief, which can provide a source of funding for many SMEs, without the expense attached to traditional business loans.

 

Fuelling expansion plans without debt

 

R&D tax relief creates options when it comes to expansion by generating another source of cash flow for the business that is set off against R&D spend. So, for innovative organisations that are carrying out eligible activities, there are much better options available than taking out traditional business loans. R&D tax relief can be a straightforward way to fuel expansion plans without harnessing the business to debt – and the substantial amounts involved can make this a smart choice for any SME looking to expand and accelerate growth.

 

The average claim is £53,000

 

The average claim stands at around £53,000, which is an amount that can make a big difference in an SME environment. Its is available on a tax-free basis and it’s also interest free, which is not something that can be said for traditional business loans. Whether your organisation is looking to survive through challenging times or fund growth over the coming years, this funding can be vital, especially as it doesn’t come with interest attached. During the pandemic there were many SMEs that only managed to stay afloat due to smart use of R&D tax relief and this is the kind of source that can provide a safety net for any organisation today, whether affected by energy price rises or increases in the cost of living.

 

A government incentive for innovative businesses

 

R&D tax relief is aimed at those businesses that are investing in eligible R&D. Any limited company can claim under either the scheme for large businesses or the scheme that is aimed at SMEs – there are no limits on industry. It’s the R&D activities themselves that will determine whether or not a business is likely to be eligible for R&D tax relief. It’s thought that, currently, around 97% of companies that are eligible for R&D tax relief are not claiming under the scheme so it’s a source of funding that is often simply going to waste. R&D tax relief works by setting off a percentage of the investment in eligible R&D activities against future tax liability or making this available as a cash tax credit.

 

If your business might be one of those SMEs that is eligible but not currently claiming then you may be missing out. There are many more optimum solutions for funding than traditional business loans – and R&D tax relief is one of them.

 

We’re passionate about supporting businesses that are brave and bold in staying ahead of the curve and are creating economic growth and opportunities for our country. With SPRK Capital, you can get advance funding on your R&D tax claim.

 

Contact us today to find out if you’re eligible.

R&D Tax Credit Loans: How can they help businesses?

R&D Tax Credit Loans: How can they help your businesses

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Any innovative business investing in R&D activities may be able to access R&D tax credit loans. This offers a quick and simple route to funds that is much cheaper, and less time consuming than going out and seeking equity. There are lots of advantages for businesses when it comes to applying for R&D tax credit loans, from the resources this makes available to the incentive it can provide for further innovation.

What are R&D tax credit loans?

 

Businesses that are undertaking eligible R&D activities may be able to claim 33% of the spending on those activities back from HMRC as a cash tax credit. This is available as R&D tax credit loans to any business that meets the eligibility criteria. It can provide a vital source of funding for accelerating the growth prospects of a business and create a source of financing for R&D investments. R&D tax credit loans are available to loss-making companies and can be a very valuable source of working capital cash flow.

 

How can R&D tax credit loans help businesses?

 

  • The opportunities to invest further in vital R&D activities – The funding and opportunity to focus more on R&D can transform this aspect of a business, pushing it up the list of priorities, providing vital financial resources and minimising risk. Being able to focus more on R&D can be transformative for the future fortunes of an organisation.
  • No need to wait until the end of the year – The benefit of R&D tax credit loans is that they are available upfront so there is no need for a business to wait until the end of the tax year to receive the cash credit. This means any business can make a difference to cash flow now and extend their cash runway.
  • An opportunity to accelerate growth and bring forward commercialisation plans – R&D tax credit loans support business growth and transformation, not just by being a source of funding but also by driving the most innovative part of the business.
  • Accessible income at a lower cost – For any business that has gone looking for funding in the past, there is no doubt that venture capital and equity funding can be time-consuming and costly. There is also no guarantee of success, no matter how appealing the business and its prospects. R&D tax credit loans offer a much more reliable option when it comes to income and can be substantial – up to 33% of eligible R&D spending. There are so many ways in which this can contribute to ongoing growth for any enterprise.
  • The freedom to focus on R&D – Especially for entrepreneurs and emerging businesses, it’s vital to be able to focus on R&D and the way that this can contribute to ground-breaking progress and discovery. R&D tax credit loans make that possible.

 

R&D tax credit loans are available to every innovative business engaging in eligible R&D activities – and provide help in a myriad of different ways.

 

Find out if your business is eligible here.

 

SPRK Capital is an innovative online provider of R&D Tax Credit loans, called the SPRK Advance. We can help you access your capital quicker. Our team would love to hear from you. Apply Now!

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.

Common Misconceptions About Claiming R&D Tax Credits (1)

Common misconceptions about claiming R&D Tax Credits

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R&D Tax Credits can be incredibly valuable and are often a game-changer, especially for high-growth SMEs challenged with cash flow. Those businesses could be eligible for tax credits to the value of 230% of R&D spending so it’s a process that is well worth investigating. However, many businesses simply don’t get involved with R&D Tax Credits – these misconceptions are often the reason why many companies miss out.

 

  • There is no R&D work to claim for – In fact, R&D Tax Credits aren’t just for robotics projects or cutting-edge tech, it’s designed to support any company that is exploring new ways of doing things, even in a mature sector. So, your business might be more eligible than you think.

 

  • If your business is loss-making, it won’t be eligible – This is simply not the case. Start-ups and pre-revenue businesses are often loss-making and this is something that the government accepts, which is why it’s possible for a loss-making business to start claiming R&D Tax Credits too.

 

  • If the business has received a grant, then it won’t be eligible – This will depend on the type of grant that your business has received. One form of state aid is allowed per project so if you’ve received a grant then you won’t be eligible for claiming R&D Tax Credits for that project. But if the grant received doesn’t count as state aid, then this won’t affect your eligibility.

 

  • The R&D work that the business does is for other organisations – You can still claim R&D Tax Credits where you’re carrying out development work for other companies. The key criteria here are that you’re carrying out the work at your own risk and the outcome is surrounded by significant uncertainty. If the other business isn’t reimbursing your costs, then you can use R&D Tax Credits.

 

  • Making the claim is a complex process that there is just no time for – What many organisations don’t seem to realise is the cost-benefit of making a successful R&D Tax Credits claim. If you’re claiming under the SME scheme then you could be eligible for a tax credit of 230% of the spending you’ve made on development – that could potentially wipe out an entire tax year’s liability or result in a payable credit for loss-making companies.

 

  • R&D Tax Credits are only designed for big and well-established companies – In fact, it’s the opposite, the scheme is much more generous to smaller businesses and start-ups.

 

  • It takes a long time to access the cash – It can do if you’re waiting until the end of the tax year but there are other options to speed this up, such as R&D Advance Funding. R&D Advance Funding can enable you to access financing as you incur your development costs throughout the year.

 

  • You can only use the scheme for products – Yes, the highest volume of claims is for products but the scheme is also available for services and intangible research. And there is no requirement for products or services to be profitable either – you can make a claim whether they are profitable or not.

 

Don’t let these common misconceptions prevent your business from accessing the benefits of R&D Tax Credits.

 

The key is working with a reputable R&D Tax Claim Advisor focused on the quality of the submission, not just the price being charged for that submission. HMRC is rightly looking closely at R&D Tax Claims, the costs of non-compliance are high. We’re passionate about supporting businesses that are brave and bold in staying ahead of the curve and are creating economic growth and opportunities for our country. Apply Today with SPRK Capital to get advance funding on your R&D Tax Claim and more.

R&D Tax Credits - What are they and how can I claim them

R&D Tax Credits – What are they and how can I claim them?

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For companies carrying out research and development, R&D Tax Credits can be a vital source of support. That’s especially so for SMEs, which benefit from some particularly generous limits. R&D Tax Credits are designed to help any qualifying organisation when it comes to development – they have been a part of the government’s business strategy for several years and could be a great source of support for your company.

 

What are R&D Tax Credits?

 

There are two types of R&D Tax Credits – Small and Medium-sized Enterprises (SME) and R&D Relief and Research and Development Expenditure Credit (RDEC). The SME scheme is aimed at smaller companies carrying out development activities and provides the opportunity to reinvest cash. This can either be a credit against a future tax bill (the credit is equivalent to 230% of the value of R&D spending, which could potentially cover tax liability for an entire year for some businesses) or a cash payment to the value of 14.5% of the amount spent on R&D. The RDEC scheme applies to companies with more than 500 staff and a total turnover of over €100m or a balance sheet total over €86m. It creates a credit of 13% of R&D expenditure that can be applied to a future tax bill.

 

What kind of company is eligible?

 

R&D Tax Credits are available to both companies paying UK corporation tax and loss-making businesses, engaged in seeking a technical or scientific advance. Other conditions include commercial viability and oversight by experts in the field.

 

How can your business claim R&D Tax Credits?

 

  • Define the project. These tax credits can be claimed for multiple projects in a year, which can be helpful if part of the work doesn’t count as eligible costs. Projects should be clearly defined in terms of a start and end point – those that have a duration of years can be broken down into phases for the purposes of R&D Tax Credits.
  • Choose the scheme. While the SME scheme is more generous, the RDEC scheme is the only one that will be available to organisations that fall above the size and turnover cut-off.
  • Collect eligible costs. There are limits on the costs that companies can claim under either scheme and these fall into eight distinct categories:
    • Direct staff costs
    • The cost of external contractors and experts that have been contracted by the company
    • Any R&D that has been subcontracted out but is still paid for by the company
    • R&D consumables
    • Software that is used to run the project
    • Payments to clinical trial volunteers
    • Funding for independent research for some parts of the project
    • Designing and building prototypes
  • Submit the application. This will need to include a technical narrative and the right paperwork (CT600). Claims can be made up to two years after a project ends.

 

Claiming R&D Tax Credits can be incredibly beneficial for businesses engaged in development and looking for ways to minimise tax burdens going forward. With SPRK Capital Advance Funding for businesses, you can access your funds throughout the year, on either an ad hoc or quarterly basis, without the need to wait more than 15 months down the line.

If you’re looking for a strategic option to keep cash flow healthy, get in touch with the team through our contact page or apply now.

 

SPRK Announces Appointment of Director of Operations

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SPRK a deeper understanding

SPRK, the innovative online provider of R&D tax credit funding, is pleased to announce that Kyp Andronicou has joined as Director of Operations.

Kyp has over 12 years’ experience in financial services with a focus on SME lending and FinTech platform operations. He joins from Funding Circle where he was most recently Head of Investor Services for UK & Europe having held positions including Operations Manager for Capital Markets. Prior to this Kyp held similar roles at Goldman Sachs in both Investor Services and Derivative Operations having obtained a first class degree in Economics.

Dom Peasley, CEO SPRK said, “We are excited to have Kyp join the SPRK team and continue to attract top tier talent at such a pivotal point in our expansion. Having an individual who understands the operational complexities of running an online SME lending platform is vital to the top tier service we provide to our advisors, borrowers and investors.

Having worked alongside Kyp during his six-year tenor at Funding Circle I have seen how his expertise helped to successfully scale the business there.

Speed and certainty of finance for borrowers at SPRK is now combined with an individual who can ensure that we can maintain a world class operations framework for all our stakeholders.”

About SPRK:

SPRK provides SMEs the ability to access cash sooner from their eligible R&D spend 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, 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 and facilitate the R&D claims for our borrowers.

Enquiries:

SPRK Capital
Dominick Peasley,
0800 0025 100

SPRK Announces Appointment of Business Development Director

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SPRK growth

SPRK, the innovative online provider of R&D tax credit funding, is pleased to announce that James Teague has joined as Business Development Director.

James has more than 15 years’ experience in financial services with a focus on supporting SMEs with lending and growth opportunities. He joins from EY where he was the Business Development leader for their UK and Ireland tax department. Prior to this James held similar roles through his career at PwC, RSM and Moore Stephens (Acquired by BDO).

Working with SMEs from seed through to IPO, including a number of FTSE 100 clients, James has covered clients from both a tax advisory, lending and underwriting perspective.

Dom Peasley, CEO SPRK said, “We are excited to have James join the SPRK team at such a key stage of our growth. We are committed to ensuring that our SPRK Approved Advisors and clients have an unrivalled level of service.

Speed and certainty of finance at SPRK are now combined with an individual who is able to help guide our advisors and borrowers on their journey to a key source of non-dilutive capital through a SPRK Advance.”

About SPRK:

SPRK provides SMEs the ability to access cash sooner from their eligible R&D spend 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, 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 and facilitate the R&D claims for our borrowers.

SPRK was founded by its Chairman Tony Brennan following the successful launch, build and subsequent sale of Radium Capital in Australia. Radium has become the largest specialty lender for R&D tax credits in Australia in the five years since it launched.

Enquiries:

SPRK Capital
Dominick Peasley,
0800 0025 100

Sprk Announces £50m Financing Facility to support UK SMEs

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Igniting innovation

Sprk, the innovative online provider of R&D tax credit funding, is pleased to announce that it has today closed a new financing facility.

The financing facility provides up to £50m of lending capacity, dedicated to advancing R&D tax credits. The facility helps SMEs who are looking to accelerate their R&D programmes with a nondilutive source of funding.

Backed by a leading UK credit asset manager, managing over £3bn in AuM, this gives Sprk the ability to ensure that borrowers have the certainty of finance when they are approved.

Dom Peasley, CEO Sprk said, “Following on from our oversubscribed Series A we are extremely encouraged by the backing of one of the UK’s leading credit managers. The facility provides the
lending capital to help SMEs who are looking to accelerate their R&D programmes with a nondilutive source of funding. We believe this is the largest dedicated R&D tax credit financing facility
in the UK”.

Access your money sooner

“Sprk is now able to offer R&D tax credit financingfrom the point that eligible expenditure is incurred, as early as Q1 in the financial year, this is a first for the UK market and will revolutionise the R&D tax credit advance market. We view a Sprk Advance as an integral part of a SMEs cashflow planning when they are engaged in R&D.

Sprk believes in having a simple, straightforward and transparent lending proposition with no upfront fees paid by the borrower and no monthly interest payments. A Sprk Advance can improve
the cashflow position for thousands of SMEs, supporting British businesses and accelerating innovation.

Our investments in technology enables speed of underwriting, this is now combined with the certainty of finance to ensure those Sprk approved clients are funded within 48 hours.”

About Sprk:

Sprk provides SMEs the ability to access cash sooner from their eligible R&D spend 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.

Working through a dedicated network of Sprk Approved Advisors, we ensure that Sprk partners with high quality firms who can provide expert advice and facilitate the R&D claims for our
borrowers.

Sprk was founded by its Chairman Tony Brennan following the successful launch, build and subsequent sale of Radium Capital in Australia.

Radium has become the largest specialty lender for R&D tax credits in Australia in the five years since it launched.

Enquiries:

SPRK Capital
Dominick Peasley,
0800 0025 100