Costs you can claim
There are many costs you can claim within the R&D Tax Credit scheme to cover various aspects within your business. You can claim costs on the project from the date you start working on the uncertainty until you develop or discover the advance, or the project is stopped.
Aside from watching your business as a whole benefit and flourish from the R&D Tax Funding, your staff will also directly reap the benefits. For staff working directly on the R&D project, you can claim a proportion of; their salaries, wages, Class 1 National Insurance contributions, and pension fund contributions.
What expenditure can be claimed for in a R&D project?
Depending on what industry you’re in depends on what you can claim...
We’ve put some examples within the Engineering Industry together, so you can get an idea:
Staff Costs
Employee costs (salary, national insurance and employer pension)
are both apportioned for their time spent on the R&D project PLUS any reimbursed associated business expenses
Software: Purchased for R&D purposes and costs apportioned for any subsequent use
Subcontracted R&D: You can claim 65% of what you paid your R&D subcontractor
Utilities & Consumables: Water, fuel, power and material used in the project
Prototypes: Produced for R&D purposes.
Certain types of software (e.g. if you’re implementing a bespoke system to streamline your product of process to drive efficiency)
Here at Recoup Capital, we are not only specialists in R&D tax credits for engineering firms, but have helped a huge range of other sectors successfully claim for R&D.
Here is a more generalised example below...
You can claim R&D Tax Credits on revenue expenditure (day-to-day operational costs). This includes:
100% of the costs of staff salaries, employer’s NIC, pension contributions and reimbursed expenses
65% of the costs of hiring subcontractors and freelancers
Materials and consumables including utility bills (water, fuel and power) that are used up or transformed by the R&D process.
Payments to the subjects of trials or failed projects (e.g. if you’re an architect firm tendering five to ten jobs a month and only win one contract, but you’ve done the R&D on producing the assets, the work undertaken is usually eligible)
Capital expenditure (money you may have spent on fixed assets such as land and buildings) isn’t eligible R&D expenditure within the claim.
If you’re wondering how to qualify for R&D activities, let us elaborate a bit more. R&D activities are any aspects of innovation in your business across new products, services, or processes. In essence, this means if you’re spending funds on innovation, you will qualify for a R&D Tax Claim. To check your R&D eligibility, contact us now.