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How will I receive my benefit in the SME R&D scheme?

When you use the SME R&D scheme, there are a total of five ways you can get your benefit. Take a moment to read about each option below so that you can begin to work out which one is best for your business:

  • Cash Reimbursement This is when a claim has been made for the last two periods. These claims will result in a cash reimbursement if you have already paid your Corporation Tax.
  • Tax Savings Against Your Corporation Tax – If your claim is due to be submitted in the year that you are filling your Corporation Tax return, then you may be able to get your benefit as a credit against your tax bill. However, for this to be the case, your business needs to be making a profit. 
  • Relief Against Losses – If you find that you are in a loss-making position after you have completed your R&D claim, then you can choose to carry back the amount to the previous year if it was a profitable year. You can also choose to carry it forward if you expect to be profit-making in the year coming. This process can enable you to generate a cash rebate against tax saved or as a tax-saving against your Corporation Tax.

If you are not concerned about cash flow, then a carry-forward is more valuable to you in the future as long as you do not need the cash injection into your business.

  • Receiving a Cash Credit If you are a loss-making company, then you can elect to get a cash payment that works as an exchange of any R&D enhanced losses that you have. This is a great choice for any company that needs a cash injection and is valued at up to 33p for every £1 spent on Research and Development.
  • Opting for a Combination – Your final option is to choose a combination of the previous options. One example would be to make the saving against your Corporation Tax as well as carrying forward or back any losses to help offset them against your profits. 

Deciding which option is right for your company can be tricky, especially when there are such a range of options and contexts. We would always advise that you engage with an expert to discuss your options.

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R&D tax credits

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