Whether it’s prototyping, development or experimentation with materials or physical production processes, there’s a wide variety of disciplines involved in advancing wind energy science across all elements of the turbine lifecycle. Even though renewable energy businesses are spending staggering amounts on developing new technologies, very few are actually claiming the hundreds of thousands of pounds they are entitled to through R&D tax relief.
In the current economic climate, it’s surprising that more wind energy businesses haven’t already explored all of the tax incentives available to help lighten the burden by either reducing tax payable or securing a tax repayment. Especially now, as the offshore wind sector in particular must accelerate innovation in order to reduce the cost of energy production as we move towards net zero targets.
Introduced by the UK Government in 2000, the R&D tax relief scheme is designed to encourage innovation and global competitiveness by allowing companies to reclaim some of the money invested in qualifying research and development. As one of the government’s most generous forms for tax relief R&D tax credits are generally considered to be one of the most attractive tax reliefs available, often resulting in significant cash repayments from HMRC.
It’s available to all kinds of businesses, and has proven very lucrative in the past for companies in the process and manufacturing sector. For every £100 of qualifying R&D expenditure, relief is available at £25.00 for profit-making SMEs and £33.00 for
loss-making SMEs. For large companies the Research and Development Expenditure Credit (RDEC) scheme provides relief as a taxable credit set at 13% of the qualifying R&D expenditure.
A common misconception is that the scheme is just for companies with R&D departments and men in white coats. The fact is that any company that spends money trying to improve a product or service through a technological advance, using qualified staff and appropriate project controls, and where there’s doubt about the project’s success, is likely to be eligible.
The benefits of the programme include increased cashflow, which is especially important to innovative, developing renewable energy companies. It also encourages development of a corporate philosophy that embraces innovation and improvement.
