What is R&D?
Encouraging innovation and fuelling growth, R&D tax credits have the ability to transform your business.
The Research and Development tax credit incentive was introduced in April 2000 by HMRC and is designed to encourage and reward UK-based Ltd companies for investing in innovative products, services and processes by providing them with
a tax credit of up to 33p for every £1 invested.
For larger companies a tax credit of 13% which enables them to claim back up to 11p for every £1 spent on qualifying research and development after CorporationTax deductions.
What activities can be included in a R&D project?
- Overcoming challenges and uncertainties;
- Designing and making products;
- Suggesting a more cost effective process;
- Suggesting a more time efficient process;
- Time spent researching and development of current projects;
- Seeking to improve processes, services, materials or devices;
- Production of prototypes or performance testing;
- Development of software or IT solutions;
- Investment in failed projects or developed products that are never launched/used;
- Efficiency of product, process or service;
- Employing any staff of a highly skilled background or with technical or scientific background;
Civil projects that may qualify for R&D tax relief include:
- Value engineering for clients (solutions presented that have saved clients’ money);
- Challenging ground and foundations conditions encountered and overcome;
- Projects with challenging drainage and service installs;
- Environmental issues and how these were overcome;
- Planning conditions imposed by local authorities and how these were overcome;
- Use of CAD and CAM software within the business to improve efficiency;
- Recycling of aggregates found on site;
- Use of modular and precast solutions;
- Attaining high energy values for housing, or;
- Innovations in plant and machinery, making the company more efficient.
What expenditure can be claimed for in a R&D project?
- Staff Costs – Employee costs (salary, national insurance and employer pension) are 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.