Picture yourself planning a journey by car. You’ve got a full tank of fuel and are ready to make some significant headway, but then you’re told that you can only use a fraction of that fuel today, and the rest will be rationed out over the next five years. That’s a bit like what’s happening when you amortise the Research and Development (R&D) tax credit over five years instead of immediately writing it off.
Now, we’ve been knee-deep in the R&D tax industry for seven years, and we can tell you that spreading this credit can certainly put a damper on the financial dynamics of small businesses. It’s like waiting to start the next leg of your journey – you’re ready for it now, but you’ve got to wait.
We’ve seen firsthand how immediate access to these credits can supercharge a business’s journey, and the R&D tax credit often functions as high-octane fuel, driving them to hire more talent, invest in new technologies, and accelerate their growth.
When we talk about spreading this credit over five years, it’s akin to switching from a high-speed motorway to a winding, country road. It doesn’t halt progress, but it can certainly slow things down, particularly for small businesses trying to keep up with larger competitors with more fuel in their tanks.
That being said, there’s a silver lining. Spreading the credit can provide a steady stream of relief that aids long-term financial planning and strategic decision-making. It’s a slower journey, sure, but it’s a consistent one.
Ultimately, there’s no one-size-fits-all answer here. The best approach depends on the specific needs and circumstances of each business. Whether a high-speed sprint or a steady marathon is more beneficial varies, and that’s why getting personalised, expert advice is crucial.
ABOUT COUNTING KING
Counting King is a national tax and funding practice that helps companies with their cash flow by sourcing grants, utilising government tax incentives or finance options such as business loans and more to help them scale and grow!
We focus on innovative companies who are seeking to expand and disrupt their respective industries which in turn will help the UK become a global leader and strengthen our economy.
If you would like advice from one of our specialists, please contact us via email at info@countingking.co.uk or call us on 0800 8100 030.