Why should SMEs consider an RDEC?
The RDEC scheme offers a range of benefits beyond mere tax relief, which is why SMEs should consider an RDEC.
The RDEC can boost the visible profits in your income statement, as it can be accounted for above the line. The increased visibility of this can positively impact investment decisions for research and development.
RDEC’s benefits are not dependent on your company’s tax situation, making it easier to anticipate the relief you will receive. This stability will allow SMEs to factor the relief into their investment decisions easily.
Moreover, RDEC goes further than other schemes by offering cash credits to companies making losses.
If you want to learn more about why SMEs should consider an RDEC, click the button below and get in touch.
What are the differences between RDEC and SME R&C Tax Credits?
SME R&D tax credits is a program designed to help SMEs recoup development costs. For the SME grant scheme, an SME is classified as a company with fewer than 500 employees and a turnover of less than €100 million or gross assets of less than €86 million. If your staff headcount is less than 500, but you exceed the thresholds for turnover and gross assets, you would be counted as a large company for R&D purposes, which is when you would need to apply for an RDEC.
There are other exemptions, too. Recipients of notified state aid, partner and linked enterprises and subcontractors carrying out research and development on behalf of another company should also claim through the RDEC scheme.
The R&D scheme is more generous, allowing companies to claim up to 33% of their costs, while the RDEC rate is a standard, single rate of 15%. However, this rate is applicable whether you are making a profit or a loss.
Should you be claiming SME R&D tax credits or the RDEC scheme? Enquire via the button below – we are happy to help.
What is the SME process to make an RDEC claim?
The SME process to make an RDEC claim is similar to claiming SME R&D tax relief. However, there are some additional considerations that an SME must keep in mind when making an RDEC claim.
Firstly, an SME must ensure they meet the eligibility criteria for the RDEC. Once they have established eligibility, an SME needs to follow the RDEC accounting requirements, which are stricter than the R&D grants for small businesses.
To make an RDEC claim, SMEs must provide evidence of their research and development activities and their associated costs. This may include detailed records of the R&D projects undertaken, costs incurred, and staff involved. They should also provide supporting documentation such as receipts, timesheets, and invoices.
We recommend that SMEs contact us via the button below to get professional advice on eligibility and accounting requirements. This can help avoid errors and omissions in the claim, resulting in a delay or rejection in their application.