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Featured image text: "R&D Tax Credits UK Biogas".

Research and Development (R&D) Tax Credits for UK Biogas Plant Operators – Are You Claiming Yours?

According to many tax experts, the UK AD industry frequently misses out on R&D tax credits that are available to UK biogas plant operators and which go unclaimed.

Are you sure that your business is claiming all the R&D tax credits to which you are entitled?

No two biogas plants are ever built quite the same! Every one of them requires quite a significant degree of research and development work just to prove its feasibility, and then during the design and biogas output optimization processes.

Be aware that, in principle, this is money that can be claimed back.

Claiming R&D Tax Credits is vital while the old UK Biogas Incentives have run out and replacements are of little value

With the Feed-in Tariff (FiT) closed to new applicants1, the Renewable Heat Incentive (RHI) UK subsidy once again running out, and the UK's Green Gas Support Scheme (GGSS) so fenced around with restrictions that successful applications are rare, AD plant businesses need all the help they can get.

Tax experts are concerned that this existing tax relief is being left unclaimed. They are encouraging the many owners of AD plants to tap into every one of the existing ways to optimize their incomes.

They see it as vital to use all legitimate tax vehicles to leave no stone unturned, to increase net revenue now, and to ensure that all AD plants can be as financially self-sustainable as possible in the future.

British biogas needs all the help from R&D Tax Credits it can get!

Watch our quick video below which summarises the main points in this article:

Available Grants Tax Credit Calculator

British biogas is not taking off as fast as the industry had hoped.

The government may justifiably stand accused of stunting its growth by not only removing subsidies but also by:

  • erratic behaviour on policies
  • cancelling some grants at short notice and also
  • reducing new applicant subsidy rates with excessive haste.

Nevertheless, the AD industry may also be at fault for not appreciating, and not always applying for, tax relief in all the areas of generosity in UK taxation that do exist and have existed for some time.

Several other governments have already expanded support for the biogas sector in the last 2 to 3 years. The French, Italian, and German governments have, for example, all introduced new subsidies for biogas plants as part of the European Green Deal.

If the UK is to be able to credibly host the Global Climate Change Summit as a leading nation in the battle against rising global temperatures, it needs to act fast. Until it does act, it is more important than ever that prudent AD plant operators ensure that they make use of every available tax break.


R&D Tax Credits for Biogas Plant Operators

There is a possibility that many more anaerobic digestion and biogas businesses could be eligible to claim R&D (research and development) tax credits that have been doing so. Let's go into more detail on the tax credit available.

First, it's crucial to comprehend what research and development are.

Fundamentally, all types of businesses carry out research and development activities when they seek to yield advances in providing improved or new products, services, and processes. It forms part of the discovery phase, during which knowledge is crafted to assist in decision-making on whether the viability of the product, service, or process is worth it or not.

What are R&D tax credits?

The UK Government has set aside a fantastic incentive in the form of a tax relief fund that encourages small and medium-sized (SME) businesses to further invest in their activities that fuel innovation, research and development.

This brilliant tax relief scheme is sector-agnostic, and this means your anaerobic digestion and biogas business could very well be eligible for a tax credit, which may reduce your corporation tax cost or receive a refund from HMRC.

Many anaerobic digestion, biogas, and bioresources businesses don’t realise they are doing R&D and so miss out on crucial re-investment funds, which could give them the cash boost they need to reach their next goals quicker.

Could My Anaerobic Digestion and Biogas Business Be Eligible?

Ask yourself these questions, and if you answer yes to any of them, you may be eligible:

  1. Does my business engage in projects that seek to overcome uncertainty?
  2. Does my business spend time improving processes, products, or services?
  3. Does my business invest time to discover ways to create new products, services, or processes?

Featured image text: "R&D Tax Credits UK Biogas".Remember, the UK Government has the desire to see local businesses become successful and thrive as world contenders, and that’s one of the reasons why the R&D Tax Credit scheme exists.

Not all AD plant businesses have the expertise to assess their potential to claim back R&D spending, if so specialist anaerobic digestion and biogas R&D Tax experts are available to help maximise the claim your business rightfully deserves.

Which industry experts perform R&D?

It is reassuring to know that research and development cuts across such a wide variety of industries and is found in small to large businesses. Yes, there are popular industries like manufacturing, professional, scientific, technical, information, and communication sectors, but there are lots more industries like bioresources that qualify—trust us.

It’s quite exciting to discover the scope of R&D activities, and when you consider the fact that HMRC is quite vocal in expressing concern that many eligible businesses are not claiming R&D tax relief, there could be an opportunity for your business.

The above is based on information available on the Available Grants website:

Is it worth AD/Biogas Plant Operators Pursuing R&D Tax Credits?

Yes, and gains can be substantial.

Claims experts at Available Grants™ have worked out that the average successful claim amount is about £47k when SMEs are paid out. Given that is a substantial figure, it does seem to be worth every penny spent in obtaining professional advice in order to use their special knowledge to maximize the claimable value.

Anaerobic digestion and biogas businesses can certainly go through the process themselves, and you can ask their accountant to provide a submission, but you may want to consider why you should rather leave it to a specialist firm.

Are biogas plant operators eligible for R&D claims?

Having considered the definition of R&D from the perspective of HMRC, your project(s) should seek to challenge and overcome uncertainties and introduce new elements of knowledge.  If you are not sure if this is what your project(s) achieved, that's where an expert can help you.

What Sort Of Costs Fall Under The Biogas Plant Operators R&D Category?

Without going into the finer details, biogas plant operators and anaerobic digestion industry claimants are often surprised that costs like wages, salaries, trials, prototypes, consumables, etc. are potentially eligible as part of the R&D costs.

Experts in this field of taxation say that there are other eligible cost categories too. Some of these advisors will also work on a no-win, no-fee model, so it will not cost you a penny if they aren’t successful with your claim.

Use an R&D calculator to find out how much you might be able to claim.

We provide a link to a calculator to help you get a sense of how much you may be eligible to claim back.

Click here to use the Available Grants R&D Tax Credit Calculator….

Note 1 – UK Feed-in Tariff (FiT) scheme

The Feed-in Tariff (FiT) scheme in the UK has closed to new applicants. It officially ended on April 1, 2019. However, for those who applied and were accepted into the scheme before that date, the 20-year period of FiT payments will still be honored.

Following the closure of the FiT scheme, a new program called the Smart Export Guarantee (SEG) was introduced in January 2020. The SEG, which rewards individuals for exporting renewable electricity from their homes, differs from the FiT in several ways, including the variation of tariff rates across different electricity suppliers and the basis of payments, which are made solely for the amount of electricity exported​​​.

For further details, you can visit the Ofgem website here.


[First published February 2021. Updated December 2023.]

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