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Are You Currently Raising Capital? Here’s How the R&D Tax Incentive Could Make Your Life Easier.

Whether you a first-time entrepreneur or a seasoned veteran, capital raising is one of the most difficult parts of starting and running your own business. It is estimated that over 90% of start-ups fail and one of the main factors that leads to this, is the inability to raise the funding required to continue to finance the business.

 

There are many different avenues that exist for entrepreneurs to raise funding for their business, including:

 

  • – Family and friends
  • – Angel investors
  • – Networking groups
  • – Platforms
  • – High Net Worth’s
  • – Fund Managers and Venture Capitalists

 

These individuals and/or groups of investors not only provide the business with the capital required to continue to scale, but will also often bring expertise, knowledge, operational experience and assist with opening doors and introducing other networks into the business. The process of raising funds from these individuals and/or groups though, can often be time consuming and will take the Founder away from the day-to-day operations of their business, meaning a significant opportunity cost exists from time that is allocated towards raising capital.

 

One avenue of funding that is often overlooked or not clearly understood, is the Research and Development (R&D) Tax Credit Incentive. As a start-up and scale-up, R&D is one of the most essential parts of your business and is what leads to business growth; advances systems and technology; and drives the scalability of your company. The main purpose of the UK’s scheme is to reduce the cost of R&D, by offering tax offsets for eligible expenditure.

 

Does my business qualify?

Work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths. The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.

 

To get R&D relief you need to explain how a project:

 

  • – looked for an advance in science and technology
  • – had to overcome uncertainty
  • – tried to overcome this uncertainty
  • – could not be easily worked out by a professional in the field

 

How Can I Access This Funding?

Start-ups and scale-ups may be eligible to claim part of their Research and Development spend under HMRC’s R&D Tax Credit Incentive. These companies may be able to claim up to 33% of qualifying expenditure under this scheme. Specialist R&D Tax Consultants exist in order to provide guidance and assistance to these companies, who may be new to the scheme or may not be optimising the amount that they may be entitled to claim back. These companies will either charge a company a fixed fee in order to do the consulting work for a business or charge a success fee on the money that is returned once the claim has been approved by the Government.

 

Walmer Group is one such specialist consultancy that exists to help sustainable businesses in maximising their claim from HMRC and works purely off a success fee from grant money that has been approved and returned under the scheme. There are many advantages that exist for Founders and Entrepreneurs under this model, but the main one is that it frees up resources and time that can otherwise be spent in scaling and raising additional finance for their business’ growth.

 

Please get in touch for a complementary consultation on what your company might be eligible for by emailing James on jcampbell@walmergroup.com.

 

R&D Tax Incentive Unchanged as Rishi Continues Innovation Push

700,000 jobs lost, £280 billion spent, an additional £127 billion planned to be spent on revival, the UK economy shrunk 10%, highest ever borrowing outside wartime… any one of these phrases would be a hard-hitting newspaper headline; the coronavirus pandemic has terrorised the world and now it’s time to recoup, rebuild and recover.

The 2021 Spring Budget was announced on Wednesday 3rd March 2021, a plan to recover from the largest deflation of the UK’s Gross Domestic Product (“GDP”) in modern history; a steep feat which lies on the shoulders of Rishi Sunak.

 

Forecasts

Office for Budget Responsibility (“OBR”) forecast the following:

  • – UK economy to return to its pre-COVID state by June 2022
  • – UK economy to be 3% smaller than originally predicted in 5 years’ time due to coronavirus

 

UK economy will grow by:

  •   – 4% in 2021/22
  •   – 7% in 2022/23
  •   – 7% in 2023/24
  •   – 6% in 2024/25
  •   – 7% in 2025/26

 

Unemployment rate would have peaked at 11.9%, however with the Chancellor’s recovery plan it should peak at 6.5% (1.8m fewer people out of work)

 

Announcements related to Innovation Funding

  • – No changes to the government’s Research and Development (R&D) investment, where they are still planning to have £22 billion per year by 2024 to 2025 to claim from various incentives
  • – A new consultation into the R&D tax relief incentive to attract more investment into science, research and technology
  • – Corporation Tax to increase from 19% to 25% in April 2023 for companies that generate over £250,000 in profits. For companies generating £50,000 or less in profits, they will remain at 19% Corporation Tax rate. Companies generating between £50,001-249,999 of profits, will be taxed at incremental rates from 19 to 25% Corporation Tax
  • – A new ‘super-deduction’ for business investment, with the ability to deduct 130% of the cost against tax on profits
  • – A new £40bn UK Infrastructure Bank based in Leeds, investing into green projects throughout the UK
  • – UK companies will be able to carry back losses (maximum of £2m) up to 3 years rather than the current 2 year carry back

 

Please see the full Budget report here.

 

If you have any questions on the above or would like clarification on any of the initiatives, schemes or amendments within the Spring Budget 2021, please contact Jenson Brook by email at jbrook@walmergroup.com.

Is the sole use of renewable energy a reality or just mere fantasy?

It’s undoubted that a radical change in the way we produce energy is needed. But creating a society powered solely with renewable energy may be an unrealistic aspiration and the scientific community remains in contention about the reality of such a prospect. Many believe that we will have to supplement sustainable sources with a portfolio of low carbon strategies like nuclear energy or coal mining accompanied by carbon capture initiatives.

The primary boundary to reaching 100% renewable society is that we do not yet the technology allowing it. While renewable sources have been the oldest source of energy, their use on a mass-industrial level is fairly novel. We do not yet have all the technologies that might allow us to electrify transport, heating and industry in a way that is merely practical, never mind competitive with non-sustainable energy sources. However, there is reason to be optimistic. Renewable energy is the fastest growing energy source in America and increasingly investment is pouring into green companies and initiatives. In years to come, new powerful technologies and key research into tidal and wave energy may shed some light on the path to a society powered entirely by sustainable energy.

Some countries have already asserted faith in this possibility. Germany, and many other countries have vowed to switch to 100% renewable energy by 2050 and a wealth of research deems that many more countries could do the same. Critical to this possibility is geographical connectedness. Many of the boundaries posed by a reliance on solar power and wind energy is the difficulty of storing such large amounts of energy. For instance, a sophisticated collection of renewable energy super grids could be strategically placed throughout the US, Canada and Mexico, allowing energy to be distributed depending on population and demand. This interconnectedness could be a means of overcoming the need for cumbersome storage facilities that have obstructed talks of widespread solar and wind energy use.

In the UK, 2020 saw the country have a record coal-free run that came to an end after more than two-months, making it the longest period since the industrial revolution the country has not used electricity produced using the fossil fuel. The total coal-free period lasted 67 days, 22 hours and 55 minutes.

While it is certain the world is moving towards a greener future, the absolute use of renewable energy remains an uncertain reality with many political, scientific and ideological boundaries to overcome.

A summary of the government’s 10-point green plan to confront the climate crisis.

In the run up to the United Nations Climate Change Conference due to be hosted in Glasgow this year, government has published a ten-point green plan to confront the climate crisis. The £12bn blueprint for a “green industrial revolution” comprises of advancing off shore wind energy and stimulating green finance, as well as creating 250,000 jobs in the process.

The journey towards building a carbon neutral society will bring an end to the widespread use of combustion engines by 2030, using £3000 grants to entice Brits into purchasing electric cars. The government will fund 75% of the cost for installing electric vehicle charge points at all domestic properties through the Electric Vehicle Homecharge scheme. The 10-point plan also emphasises a move towards making transport a daily choice for users as new and efficient transport links are developed.

Wind energy is due a huge expansion with the proposal to quadruple offshore wind power, a central part in Britain’s mission to “build back better” following the turbulence of the coronavirus crisis. This will see the wind energy industry produce 40gw of energy by 2030, having grown from 1gw to 10gw in the last decade. There is no shortage of investment for offshore wind energy but Britain’s ability to fulfil this ambition will depend on the continuing decrease of building costs as well as the government’s ability to grant seabed licenses.

Houses are also due an upgrade with one billion to be spent on insulating homes and public buildings. The government are also following advice from the Committee for Climate Change which encouraged the need for commercial investment into producing hydrogen. The process which splits water particles with electricity, will be used to produce hydrogen that can replace gas, with a view to heating an entire town with this green method by the end of the decade.

Other strategies include making London “the global centre of green finance” after slipping behind Amsterdam and Zurich in the table for having the most sustainable investments and products. Support for greener energy in the aviation and maritime sectors will come in the form of £20m, and £200m will go towards carbon capture initiatives alongside the proposal to plant 30,000 hectares of trees every year.

Representatives of The Green Alliance, Renewable UK and many other organisations have welcomed the ambition of the plan, particularly its focus on wind energy. Though, some have argued it is underfunded. One Oxford-based consultancy, Aurora Energy Research, has suggested it would cost £50bn to fund offshore wind energy alone , while Labour’s business shadow secretary has proposed an equivalent green plan costing £30bn. The UK, however, remains one of the global leaders in the charge towards carbon neutrality.

Companies across the UK that are working to curb climate change, may be eligible to claim part of their Research and Development spend under HMRC’s R&D Tax Credit Scheme. These companies may be able to claim up to 33% of qualifying expenditure under this scheme. Specialist R&D Tax Consultants exist in order to provide guidance and assistance to these companies, who may be new to the scheme or may not be optimising the amount that they may be entitled to claim back. These companies will either charge a company a fixed fee in order to do the consulting work for a business or charge a success fee on the money that is returned once the claim has been approved by the Government.

Walmer Group is one such specialist consultancy that exists to help sustainable businesses in maximising their claim from HMRC and works purely off a success fee from grant money that has been approved and returned under the scheme. There are many advantages that exist for Founders and Entrepreneurs under this model, but the main one is that it frees up resources and time that can otherwise be spent in scaling and raising additional finance for their business’ growth.

Please get in touch for a complementary consultation on what your company might be eligible for on info@walmergroup.com.

Are you currently raising capital? Here’s how the R&D Tax Incentive could make your life easier.

Whether you a first-time entrepreneur or a seasoned veteran, capital raising is one of the most difficult parts of starting and running your own business. It is estimated that over 90% of start-ups fail and one of the main factors that leads to this, is the inability to raise the funding required to continue to finance the business.

There are many different avenues that exist for entrepreneurs to raise funding for their business, including:

• Family and friends
• Angel investors
• Networking groups
• Platforms
• High Net Worth’s
• Fund Managers and Venture Capitalists

These individuals and/or groups of investors not only provide the business with the capital required to continue to scale, but will also often bring expertise, knowledge, operational experience and assist with opening doors and introducing other networks into the business. The process of raising funds from these individuals and/or groups though, can often be time consuming and will take the Founder away from the day-to-day operations of their business, meaning a significant opportunity cost exists from time that is allocated towards raising capital.

One avenue of funding that is often overlooked or not clearly understood is the Research and Development (R&D) Tax Credit Incentive. As a start-up and scale-up, R&D is one of the most essential parts of your business and is what leads to business growth, advances systems and technology and drives the scalability of your company. The main purpose of the UK’s scheme is to reduce the cost of R&D, by offering tax offsets for eligible expenditure.

Does my business qualify?

Work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths. The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:

• looked for an advance in science and technology
• had to overcome uncertainty
• tried to overcome this uncertainty
• could not be easily worked out by a professional in the field

How Can I Access This Funding?

Start-ups and scale-ups may be eligible to claim part of their Research and Development spend under HMRC’s R&D Tax Credit Incentive. These companies may be able to claim up to 33% of qualifying expenditure under this scheme. Specialist R&D Tax Consultants exist in order to provide guidance and assistance to these companies, who may be new to the scheme or may not be optimising the amount that they may be entitled to claim back. These companies will either charge a company a fixed fee in order to do the consulting work for a business or charge a success fee on the money that is returned once the claim has been approved by the Government.

Walmer Group is one such specialist consultancy that exists to help sustainable businesses in maximising their claim from HMRC and works purely off a success fee from grant money that has been approved and returned under the scheme. There are many advantages that exist for Founders and Entrepreneurs under this model, but the main one is that it frees up resources and time that can otherwise be spent in scaling and raising additional finance for their business’ growth.

Please get in touch for a complementary consultation on what your company might be eligible for on info@walmergroup.com.