Monthly Archives: July 2017

Do I qualify for research and development tax credits?

What are research and development tax credits?

Research and development (R&D) tax credits are a government tax incentive for UK companies, especially small and medium sized enterprises (SMEs), designed to encourage investment in innovative products, processes and services.

The government announced in March 2017 at the Spring Budget its commitment to R&D tax incentives going forward, which is particularly helpful and reassuring post Brexit. There will be an additional £4.7 billion invested by 2020-21, which will include improving awareness of the R&D scheme amongst SMEs, as it is widely accepted by HM Revenue and Customs (HMRC) that only a small proportion of SMEs undertaking qualifying R&D have claimed the tax relief. This represents a significant opportunity for SMEs undertaking innovative activities that have yet to claim R&D tax credits.

What is it worth?

R&D tax credits are extremely valuable for SMEs and are worth the equivalent of up to 33% of a company’s R&D expenditure being available as a cash repayment from HMRC or reductions of tax bills.

What type of work qualifies for R&D?

Whilst the Government plans to increase certainty and simplicity around making R&D claims, currently HMRCs R&D conditions are very broad. Therefore, SMEs in most sectors and industries can potentially qualify for R&D tax relief.

If you are not sure if the project you are undertaking is scientifically or technologically feasible or you don’t know how to achieve the desired outcome, it is likely that your project will qualify for R&D tax relief. This is even the case where you have incurred expenditure but your project has not been successful.

The type of project work could include creating new products, services or in-house processes. It could also include significantly changing or adapting your current products, services or processes.

Basically, if you are doing something that your competitors are not doing and would be impressed by, there is a reasonable chance that it could qualify as an R&D activity.

What costs qualify?

The main cost is usually the salaries of people engaged in the R&D activity, including employer’s national insurance and any pension contributions. Other allowable costs typically include consumables, sub-contractor’s costs, software and some utility costs if these can be directly related to the R&D activities.

How we can help?

Here at PM+M we have a wealth of R&D experience and have made hundreds of successful claims on behalf of our clients. Each client and R&D project is unique, so at PM+M we offer a no obligation meeting with a member of our tax team. This allows us to understand your business and the type of project(s) you are working on, with a view to assisting you in starting to identify any qualifying R&D activities.

Below is a summary of our most recent R&D claims made on behalf of our clients:

  • Mattress manufacturer – unique mattress designs improving comfort and reducing heat retention. This claim resulted in a £50,000 tax refund from HMRC.
  • Classic Car Company – the company redesigned a continuation model of a 1950’s racing car which involved a complete overhaul of the internal setup of the car for safety purposes and making it road worthy. The claim resulted in a £60,000 tax refund from HMRC.

If you would like to discuss R&D or if you have questions, please contact Jonathan Cunningham (jonathan.cunningham@pmm.co.uk) or Claire Astley (claire.astley@pmm.co.uk)

Untangling the pensions “Webb”

As we enter a period of pension uncertainty impacted by Brexit negotiations, a coalition government and changes to the Finance Act, what could all of this mean for our pension pots?

PM+M Wealth Management hosted a breakfast session on 25th July with former Pensions Minister Steve Webb.  Steve was Minister of State for Pensions between 2010 and 2015, the longest-serving holder of the post before moving to Royal London as Director of Policy and External Communications.

Steve provided his own unique insight into the possible future structure of pensions, the impact we will face and what we should be doing now to protect our future.  Steve discussed how the Government may look to reduce the annual pension tax relief bill of £40 billion, by further reducing the annual amount you can pay into a pension, or further encouraging saving into ISA’s rather than pensions, and interesting option as we all agreed.

On the upside the 25% tax free cash element of a pension is likely to remain over the long term, to quote Steve, Governments will “pluck the goose with the minimum amount of hissing!”

With a number of bankers in the room the conversation soon turned to the transfer out of Defined Benefits Scheme to Defined Contribution schemes to take advantage of new pension freedoms.   Over the last twelve months 80,000 people have left Defined Benefit schemes, with attractive transfers values being driven by the low interest environment.   We discussed five good reasons to transfer, flexibility, higher tax free cash, inheritance tax, health and concerns over the employer, verses five good reasons to stay, certainty, inflation, investment risk, provision for survivors and taxation.

Other subjects included the ever increasing State Pension age, the new Pensions Dashboard , auto enrolment, and the possible introduction of a form of auto enrolment for the self employed.

To round off we discussed the importance of seeking financial advice.  A recent report by Royal London calculated advised clients are better off by a total of £41,099 in financial assets and pension wealth, compared to those who did not take advice.

The ticketed event raised over £300 for the Pendleside Hospice Challenge, a big thank you to everyone who attended, and helped raise money for such a fantastic cause.

If you are considering transferring out of a Defined Benefits scheme, also known as a final salary scheme or you wish to discuss any aspect of financial planning please contact Antony.keen@pmm.co.uk  

We’re hiring! Marketing and Business Development Vacancy

MARKETING AND BUSINESS DEVELOPMENT MANAGER

We are a vibrant and dynamic firm of Chartered Accountants and business advisers, with offices in Blackburn, Burnley and Bury, covering East Lancashire, Greater Manchester and beyond. We have ambitious growth plans and our vision is to be the best North West firm of finance professionals.
We are very proud of our culture and team engagement and were recently placed 3rd in the 2016 Accountancy Age Top 10 UK Employers as well as being awarded Investors in People Gold status.

We are looking for an experienced and enthusiastic marketing manager to join our team and help us shape the future of PM+M.

You will be responsible for:

· Development and implementation of marketing and business development strategy to meet the firm’s goals.
· The creation, delivery and co-ordination of all marketing activity across all departments.
· Co-ordinating and guiding the partners and managers in effective business development activity and targeting using sales and pipeline management.
· Championing the PM+M brand, ensuring all internal and external marketing activities are on brand and in line with our value proposition.
· Control of marketing budget.
· Responsibility for proposal and pitch production and managing follow-up activity.
· Driving and tracking sales pipeline and opportunity management from within the current client portfolio and new clients, including client data management.
· Managing the firm’s websites, ensuring that they and all internal and external facing collateral are brand compliant and in line with the firm’s strategy.
· Help to build the business profile in the market place and augment successful business relationships.
· Optimise the use of digital marketing channels, including social media and effectively use digital platforms for data collection, sales funnel management and customer engagement.
· Day to day management of an outsourced PR resource including identifying opportunities for wider media coverage.
· Event management, including co-ordinating follow-up activity

Ideally, you will also have;

• Have experience of working within marketing and business development – ideally in the professional services sector.
• Have excellent verbal and written communication skills.
• Have good organisational skills as well as the ability to take initiative and manage others.
• Have knowledge of recognised software applications both from a general office perspective and specific marketing and social media applications.

Please apply in the first instance by emailing your CV  to kathryn.rigbye@pmm.co.uk

 

Brexit: Consciously uncoupling from the EU

brexit

Part 1: Using EU workers

The clock is ticking, and British business is facing an uncertain future. We see businesses trying to understand their reliance on a changing EU relationship, whether that be through importing or exporting of goods, potential price sensitivities within that chain and, in certain sectors, a reliance on EU workers.  In some cases, the tax aspects of parent/subsidiary relationships with  European head offices is also a cause of uncertainty, as is the fluid movement of staff between the organisations.

Although many businesses have clarity on which countries they trade directly with, many will not have considered the dependence of their supply chains on the EU or fully understand the impact of Brexit on their workforce.

Recent research from the Social Market Fund (SMF) and Adecco confirms that UK businesses have a significant reliance on EU workers, with an estimated 1.6 million EU workers currently employed in the UK public or private sectors, making up an estimated 6% of all UK employees.

Whilst EU workers support many growing industries across the UK, there is a higher percentage of EU labour in specific sectors such as manufacturing (10% of employees) and accommodation and food services (14% of employees). EU employees represent 14% of those fundamental roles we need in organisations such as labourers, cleaners, and shelf-fillers, and interestingly they also represent 13% of process, plant and machine operatives, all roles that have been hard for employers to fill.  With a heavy manufacturing presence in Lancashire, this could have a huge impact on these businesses and a knock on effect for the wider economy.

Shift in our regional workforce

This reliance of many Lancashire based businesses on EU employees will have to start to shift over the next two years.  In fact, many businesses are already seeing a slow down in EU workers wanting to come to the UK.   In addition, not only will Brexit affect the residence status and right to work of EU nationals working in the UK, but it will also impact those UK nationals working in the EU.

At the moment, we don’t have all the answers to predict the full impact of Brexit, but as the Government battles out trade talks over the next two years, it’s important that UK businesses understand their risk, and use this pre-Brexit period to build resilience and agility.

By using Brexit as a catalyst for change, you can cement your business’s future. We can share our Brexit experience with you, after all we are getting Brexit ready too. If you would like to discuss with us about any issues raised in this article, then please contact Jane Parry on 01254 679131, or email jane.parry@pmm.co.uk

2020 Vision For Making Tax Digital

 

 

 

An announcement yesterday from HM Treasury delayed the timetable for the Making Tax Digital (MTD) initiative imposing quarterly tax returns on businesses. The change in policy has been driven by concerns from business owners and professional bodies regarding the pace of the proposed changes. The new timetable gives business owners until 2020 to adapt to keeping digital records and updating HMRC for other taxes. Those businesses below the VAT threshold will be able to voluntarily file digitally for other taxes should they chose to do so.

From April 2019 businesses with turnover above the VAT threshold (currently £85,000) will have to keep digital records for VAT purposes only, filing returns with an MTD compatible software. Critically however businesses will not be asked to keep digital records, or to update HMRC quarterly until at least 2020.

The government’s original plan, laid out in the March 2015 Budget, required unincorporated businesses with turnover above the VAT threshold to submit quarterly returns to HMRC from April 2018 and those with lower turnover to follow suit from April 2019. Limited companies of all sizes we due to follow these rules from April 2020.

If you would like to discuss any Cloud Accounting requirements or find out about how Making Tax Digital will affect your business, please contact Jill Morris (jill.morris@pmm.co.uk)