Riding out the Economic Storm with R&D Tax Credits


  • Specialist shares insight into how money from the HMRC tax incentive is being used to keep businesses afloat and calls for more awareness of how businesses could benefit
  • Staff retention, expansion and reinvestment in staff and services are just some of the real-life outcomes from successful R&D claims detailed below
  • Only a fraction (3%) of SMEs that could be using R&D tax credits to survive and thrive through tough economic times are doing so, leaving millions of pounds unclaimed

Rising energy costs, a cost-of-living crisis, staff and supply chain issues and inflation at the highest rate since 1981. UK businesses are facing some of the most challenging times in recent economic history.

An increasing number of leadership teams are looking to investors or business loans to provide the cash boost their business needs, yet there is a rich source of Government funding that remains largely untapped.

Due to lack of awareness and doubts over eligibility, it’s thought that as many as 97% of companies that could claim for R&D tax credits are not engaged with the scheme. That means that millions of pounds earmarked to stimulate the economy and reward innovation remains untouched within the Government’s coffers.

It’s a statistic that one man is making it his mission to overturn.

Mark Joyner at Research and Development Specialists Ltd. heads up a company dedicated to helping firms navigate the HMRC Tax Incentive. He wants to spread the word that businesses could be accessing vital funds, which can be used for any purpose.

Here, Mark explains more:

“Whether it’s reinvesting in staff and services, or literally keeping the doors open while riding out the current economic storm, companies should definitely be looking into whether they qualify for R&D tax credits. We need more awareness about how this scheme can help struggling businesses.

“We’re not talking about small sums of money here; our average claim is around £53,000. That’s money that could be funnelled back into your business and working for you in whichever way it needs to be.

“Our clients come from multiple industries, some of which have taken a real hit with rising fuel and energy costs. In these instances, we’re seeing money being used to keep businesses afloat,”

Mark continues.

“Even the sectors that are less affected by cost-of-living issues are channelling the funds they claim back into staff retention, as we know there is a huge problem with filling roles and keeping talent right now.

“From the dental lab using their funds to give back to staff in the form of bonuses and wage rises, to the portacabin firm that’s employed two new members of staff with the funds they’ve received, we have some fantastic examples of the HMRC tax incentive doing exactly what it was set up to do – stimulate the economy and ensure that businesses survive and thrive in tough economic times.

“But don’t just take our word for it, I want to share some some real-life testimonials from SMEs that have reaped the rewards of an R&D tax credit claim. Our main stumbling block is awareness. Business leaders simply don’t know about the scheme or don’t have the time to find out more about it. It’s time to change that.”

  1. Using R&D for staff reward and retention

Amount received: £25,000
Used for: Staff bonuses, wage increases and advancing technology

One client working in the dental industry has invested the money received into rewarding and retaining staff at a time when many businesses are struggling to find and keep the right people. The owner of the business, which is based in Greater Manchester, said:

“It’s helped us massively because we are a small business and this has dramatically reduced our corporation tax bill, meaning we can give our staff some nice bonuses and invest our money into rewarding them for their hard work. We’re also able to look at new equipment for the laboratory to advance our technology even further.

“The biggest challenge to us as a business recently has been keeping our heads above water, making sure we can pay all the bills whilst keeping staff happy amid the cost-of-living crisis. We want everyone to have a good fair pay so this money has allowed us to do that which we’re extremely grateful for.”

  1. Employment and reinvestment in new products through R&D 

Amount received: Nearly £68,000
Used for: Employed two new staff members and further research projects

Modular and portable cabin business Britcab reinvested the funds it received through an R&D claim into further research initiatives and hired two additional employees across its depots. Company director, Richard Wilson said:

“We have been able to take on two further employees (one of them an apprentice) as a direct result of the monies received from our claims.

“It has also fundamentally changed the way we approach certain aspects of our business. We now always have a new product, initiative or idea under investigation as we have the security of knowing that we’re not wasting resources and that we will be supported financially.

“R&D gives us the security to investigate avenues and ideas that we would previously have been apprehensive to spend the time and money on.

“The pandemic and large raw material price increases have meant a perfect storm that we have had to navigate in the last 18 months. The incentive has helped us with new product lines, for example our Medcab Unit was designed once the pandemic hit. We have also been able to trial new prototype units with different designs/external claddings as prices for Cedar, and more common materials have continued to rise.

“Looking forward, as we grow, we are now looking to design our own bespoke content management system for tracking portable cabins, enquiries and marketing and we believe RDS will be able to help us with a claim in this respect.

“I would highly recommend that any company look into whether they are eligible. It has been truly transformational for our business.”

  1. Channelling R&D tax credits to increase efficiency

Amount received: Over £500,000
Used for: Bespoke software development to make internal systems more efficient

Leeds-based fleet management firm Autohorn were able to save over 780 workdays per year through the introduction of a bespoke IT system that streamlined its internal processes. Not only were the costs offset through an R&D claim worth over half a million pounds, Autohorn has reinvested a large proportion of the money into more updates to the software.

Fraser Maclean, Fleet Director at Autohorn said: “The software has completely transformed our business. Previously we would have had six different systems to do the same job but now everything is synchronised together in one place.

“We estimate conservatively that it has saved us well over 780 workdays, but to be able to offset the costs as well has been amazing for us really. What it has allowed us to do is continually improve and develop the software and really invest that money back into making our business even more efficient.”

For more information visit https://randdspecialists.co.uk/ or call 0161 823 5281.

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