What costs can I include in my R&D Tax Relief claim?
9th June 2017
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Having given you an idea about how much your claim might be, we left you asking yourself the question “what is an eligible cost?”

When you start on an R&D project you might have put together a budget and identified all of the costs that you might incur on your R&D Tax Relief journey. Just a word of warning a lot of these costs won’t end up in your claim!

So what can you include in a claim?

Staff costs – wages & salaries, bonuses, pension contributions and Employers NI contributions;

Subcontractor costs – payments to third parties for Research/Development activity;

Externally Provided Worker costs – going to an agency to bring in specialist help on a “short to medium term” basis, this is different from subcontracting as there is usually a person, your company and a third party who employs the person you will using;

Consumable Material costs – if you are developing a prototype you will often have to use materials to develop it. If you can’t then reuse these materials after they have been incorporated into the prototype then they will have been consumed and can be included in the claim;

Software costs – if you have to use specialist software in your research or you are using project management software to manage the R&D team, then you can include a proportion of the software costs;

Utility costs – we can include a proportion of light, heat and water in the R&D claim, provided that some of the R&D has been performed in house; and

Payments to Clinical Trial Volunteers – not something that most businesses will be involved in, but having previously worked for a company that ran clinical trials for global pharmaceutical companies, it is something that I am more than aware of.

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These costs can be incurred both directly by a person actively involved in the R&D project and indirectly if there is a person who supports the R&D project or a person involved in the R&D project has a role that is indirectly supporting the project. Such as recruiter actively engaged in recruiting a research assistant who will be working on the R&D project and the lead researcher then interviewing the candidates for the role.

The above eligible costs have the potential to create quite a big pot, but there are a long list of costs that we can’t include in the claim that you will have incurred during the project. These disappointments include:

  • Travel costs
  • Subsistence payments
  • Accommodation costs
  • Recruitment Agency Fees
  • Postage & Stationery costs
  • Freight costs
  • Computer & other capital equipment costs
  • Rent & Business rates
  • Telephone & Internet charges
  • Server costs (even if they are only being used for R&D)
  • Professional fees
  • Patent attorney fees
  • Computer running costs

So as you can see whilst there are a lot of costs that you can claim, there are plenty more that you might have legitimately incurred in running your Research and Development Project, but they just don’t fall into an eligible category. It is therefore important to get an expert on board to help you make the most of your claim.

Cooden Tax Consulting are a niche tax consultancy that specialise in helping SME business owners determine whether they can benefit from Technology Tax Reliefs, specifically R&D Tax Relief, R&D Tax Credits, RDEC, Video Games Tax Relief & Patent Box.

Contact us on by e-mail or phone us on 01323 458129 for more information or to discuss a potential claim.

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About the Author

Simon Bulteel - Cooden Tax Consulting

Member since: 27th August 2015

Simon Bulteel is the owner and Managing Director of Cooden Tax Consulting, a division of Cooden Consulting Limited. A niche tax consultancy specialising in Research and Development Tax Relief, Patent Box...

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