Many businesses operating in the wind energy industries push technological boundaries on a daily basis. 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.
And, even though renewable energy businesses are spending staggering amounts on developing new technologies, very few are actually claiming the hundreds of thousands of pounds in R&D tax relief that they are entitled to.
In the current economic climate, it’s still surprising that more wind energy businesses don’t explore all of the tax incentives available to help lighten the burden by either reducing tax payable and or if applicable, securing a tax repayment.
R&D tax relief
R&D tax relief is one of the government’s most generous forms for tax relief. It’s available to all kinds of businesses, and has proven very lucrative in the past for companies in the process & manufacturing sector. It’s worth investigating too: for every £100 of qualifying R&D expenditure, relief is available at £25.00 for profit-making SMEs and £33.35 for loss-making SMEs. While for Large Companies for every £100 of qualifying R&D expenditure, relief is available at £10.
Does your business qualify?
If your business spends money in paying qualified staff to attempt to solve what at first appears to be an un-solvable problem, and as a result, you are improving a product/service, you could indeed be eligible for tax relief.
What qualifies in wind energy projects?
Here are just a few examples of what can be claimed for, taken from the top performing renewable energy sectors as measured by how much they recovered in R&D tax credits from the government last year. The list is by no means exhaustive, but it does give you an idea of the types of work in your sector that could well be eligible for R&D tax credits.
• Meeting higher efficiency targets (the amount of power wind turbines can safely produce at a particular wind speed) and superior reliability of electricity generation.
• Improving durability and robustness through minimising or eliminating premature component failure (caused by the high number of load cycles and operating conditions), and minimising wear associated with loads and vibrations. This applies to the gearbox, the drive train and bearings, the hydraulic system, the mechanical braking system, the electronic controls, etc.
• Advancing the design of the rotor blades for improved reliability, structural resistance, aerodynamic properties and noise-related performance.
• Reducing environmental issues affecting local wildlife.
If these conditions apply to your project, congratulations! You can claim R&D tax relief on its day-to-day costs and expenditure, including things like staff, subcontractors, materials, software and utilities.
Things to watch out for when making a claim
One of the problems involving claims for R&D tax relief is separating the routine parts of a project from the non-routine, especially when dealing with large, high-value, complex ‘first-in-class’ items.
HMRC recognises that ‘first in-class’ items can entail a significant level of innovation, and that the production of such an item can involve one or two R&D projects. However, HMRC doesn’t expect the entire build cost of the item to qualify for R&D tax relief.
It’s very important that companies identify and assess which parts of the ‘first-in-class’ items contribute towards eligible expenditure. That’s why it’s always wise to seek professional advice before undertaking a claim.
Involving specialist advisers, such as Jumpstart, also helps you to submit your claim in the most efficient way possible, since you’ll benefit from the streamlined processes and years of experience they’ve built up submitting thousands of R&D tax credit claims successfully.
With support from the right specialist advisers, you’ll be able to:
• demonstrate which of your activities qualify under the scheme
• open up a new revenue stream to fund further R&D projects, and
• learn how to make the best use of the scheme going forward.
Jumpstart can help
Jumpstart is a leading R&D tax relief specialist, guiding companies through the complexities of submitting claims to HMRC.
Jumpstart’s large team of technical analysts have specific scientific and technical backgrounds and years of industrial experience which have resulted in an extremely high success rate in securing R&D tax relief for its clients.
And we’re not just talking about a few pounds and pence. Since inception 10 years ago, Jumpstart has identified and documented over £527 million of eligible spend and realised £106 million benefit for its clients. All on a no-win, no-fee basis. And right now, they’re submitting an average of 500 claims per year to HMRC.
