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How to Figure Out Your R&D Tax Credit

by Olufisayo
tax credits

Amazingly, there are more than 90% of companies who are not claiming the research and development tax credits that they could potentially receive. In this article, we’ll cover how you can figure out your R&D tax credit through the use of an R&D tax credit calculator.

What Is a R&D Tax Credit Calculator

You might be asking yourself exactly how does a R&D tax credit calculator work? Research and development tax credits are a government initiative to benefit and reward companies that are looking to the future and are investing in innovation.

For the majority of companies, the tax credit could return 7-10% of your qualified research expenses. This would be a dollar-for-dollar credit against the taxes that your company owes.

Essentially, a R&D tax credit calculator will give you an estimate of the amount of tax credit relief that your company could receive. First, you’ll have to mark if your company is either SME (small or medium-sized enterprise) or if your company is considered large. This is determined by the number of employees you company has, and a company is considered to be large when it has more than 500 employees.

Next, you’ll have to fill out some of your company’s financial information that is revolving around the R&D project. In all, this should include what is the cost of your paid employees, software used, materials used, and any subcontractors you may be hiring. If you’re unsure of the exact cost for your R&D project, an approximation is alright for the R&D tax credit calculator.

If you’re wondering if your company could be eligible, check to see if your business is currently in the process of creating on improving any new software, products, formulas, or system processes. If yes, and if you take on expenses during the development and improvement of these items, then your company could very well be eligible!

Benefits of Using a R&D Tax Credit Calculator

After receiving your calculation, you might be surprised to find the amount of money that your company is leaving on the table when not receiving a break within the tax scheme. After all of your calculations have come together, you could receive money for: total R&D revenue enhanced claim, further Corporation Tax deduction due to your claim, effective Corporation Tax rate revenue expenses, total Corporation Tax deduction on expenses, and the Total Value of your claim.

Using a R&D tax credit calculator to discover these kickbacks can be a fantastic move for your company since they allow you to save money and invest further in research and development in the future!

Steps for Using the Right R&D Tax Credit Calculator

Finding a valuable partner to help you determine the amount your company could be receiving through the R&D tax credit scheme is not a decision that should be made lightly. Clarus can help you determine exactly how much money you could be putting back into your company’s pocket.

Image credit: SeeYa

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