Sustainable energy is arguably the most pressing issue for the longevity of our planet. As such, many companies have identified the opportunities in this field and the benefits of providing green energy to consumers. With increased consumer interest in sustainable energy – and forecasts predicting up to half of the UK’s electricity will come from renewable sources by 2025 – it is imperative that companies invest in research and development (R&D) to find creative solutions to the question of sustainability. For the sake of the planet, and the necessity for energy firms to adapt to changing demand, investing in this innovation has become critical.
Areas of R&D
It is not only large businesses that seek innovation in sustainable energy, small to medium sized businesses also have potential to benefit from investing in sustainability and R&D. Through ingenious innovation and technological considerations, great strides have been taken in finding new methods of meeting energy demands.
- Anaerobic Digestion – Get microbes to work for you! Through innovation in using microorganisms to break down organic matter into biogas, firms have found that green, renewable energy can be generated sustainably. R&D can help firms find techniques to make this model more efficient, which benefits companies, clients and, critically, the planet. There is scope for R&D in this field, as progression of science and technology helps facilitate measurable improvement.
- Wind – Wind turbines are an important source of sustainable energy, and with March 2019 being the windiest month in a decade, there is no question as to the benefits of exploiting wind power. Wind is the cleanest and safest of all renewable commercial methods of generating electricity. R&D can help increase efficiency, but can also lead to innovative development in aspects which make wind turbines unpalatable for some. Too ugly? Too noisy? Investment in R&D can find solutions to potential perception problems.
- Solar – For many, this is the most accessible form of renewable energy. With financial incentives to install small scale, household solar panels in the UK, companies providing this service can benefit. R&D helps development and innovation in capturing solar energy and transferring this energy to heat water (the most popular form of solar energy used in the UK) or through photovoltaic panels which transforms solar energy directly into electricity.
- Hydropower – Harnessing the energy from water – be it from rivers, waves or tides – and transforming this into electricity makes 18% of the UK’s renewable energy as of 2017. People have used the flow of water since the invention of the water mill. Innovation in technology has enabled this to be scaled up significantly since then, but there is always room for further progression. Creating safer, more efficient and more compact technologies that harness hydropower can give a distinct competitive edge.
Benefits of R&D Tax Credits
If your business is involved in any of these activities, you may qualify for R&D tax credits – which can generate significant tax benefits.
Currently, for every £1 of qualifying R&D expenditure, a small to medium sized company (SME) in Northern Ireland and the rest of the UK can save 24.7p of corporation tax. Or if it does not have a corporation tax liability, it can cash losses in and receive a cash payment from HMRC at a rate of 14.5%. Large companies in the UK can also claim R&D tax credits, as can companies registered in the Republic of Ireland.
You can also potentially benefit from corporation tax savings if you have a patented invention, under Patent Box legislation in the UK. There is also the Knowledge Development Box legislation in the ROI.
The benefits are there to be claimed, although the rules relating to these tax incentives are complex and require specialist advice. This is where we can help you.
If you would like to know more about R&D Tax Credits, please get in touch to arrange a no-obligation discussion.