Energy Costs are Rising
Energy price increases will hit consumers hard this year, according to Ofgem’s energy price cap announcement. Soaring energy bills are expected to prove catastrophic to businesses as the cost of fossil fuels continues to rise, at a time when many enterprises are already struggling.
Household expenditures are expected to rise by 50%, amounting to approximately £700 for the average household. Wholesale gas prices have already risen by 250 percent since January, according to sources, resulting in price increases across the whole energy sector. Corporate energy bills are also rising at an unprecedented rate, and the impact is far greater because the energy price cap does not apply to small businesses.
Examples of Increased Energy Costs
A small business with an average annual electricity usage of 25,000kwh and a gas usage of 30,000kwh will likely see its rates rise by 200 percent, from approximately £5,118 to £10,236. A medium-sized business’s energy costs might climb from £9,437 to £18,946 based on a 50,000 KWH electricity usage and a 65,000 KWH gas usage.
Could R&D Offset Rising Energy Costs?
For business owners who are facing unanticipated expenses, particularly those who have embarked on research and development projects in the current or previous fiscal year, there may be a golden opportunity.
The HMRC tax incentive scheme was established in 2000 to aid in the growth and innovation of businesses in the United Kingdom. UK limited companies within all sectors, from start-ups to established businesses, providing them with the opportunity to get a tax return or credit for any eligible research and development work they do.
A small to medium-sized business’s average R&D claim is £53,000, which would definitely cover any company’s rising energy expenses.
Who’s Eligible to Make R&D Tax Claims?
Any research and development project should qualify a company for R&D tax credit, with the only requirements being that the project is related to a company’s sector of activity business and that documentation can be supplied to illustrate how the research and development project:
- Looked for a scientific or technological breakthrough
- Had uncertainties to overcome
- Attempted to overcome these uncertainties
- Could not be easily worked out by another professional in the field
In most circumstances, completing the research and development phase is sufficient to qualify, and there is no requirement that the product or service must be finalised. This means that even failed projects could be eligible.
How Can Enhance Consultants Ltd Help?
Here at Enhance Consultants we are wholly dedicated to capturing the maximum R&D tax benefits for companies across the UK. If you would like to see if you are eligible to make a claim, our tax relief experts can help you! Simply get in touch today for your FREE consultants, and our team will be able to guide you through the entire process.