What Costs Qualify For R&D Tax Relief?

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If you have already established that your R&D project meets the criteria for R&D tax relief, the type of costs that qualify for the enhanced tax deduction is much broader than expected. Here at The RandD Co we have experience of working with many clients who employ specialists to undertake the qualifying Research and Development on their behalf.

Therefore if you are a company and you pay a third party to undertake the R&D work, for example, if you sub-contract to precision engineers or maybe software developers, these costs would usually qualify.

The work that the third parties carry out will need to be reviewed and tested by your staff or directors. If this takes place and they spend say 20% of the time reviewing or testing or reporting on this, this means that 20% of their salary, National Insurance and pension costs will qualify for R&D tax relief.

Developing prototypes can also be included in the claim if the claiming company pays for the materials and components that are used. However, we have also carried out successful claims where a proportion of the heat, light and water costs have been allocated as a deduction for the R&D project.

In our experience there are a number of areas where costs can sometimes be overlooked and missed, these include:

  • Travel expenses; for example if staff are travelling to collect materials or to meet with researchers
  • Staff costs; for example staff in the administration or finance teams if they have been involved in arranging leases or licences or if they have worked on funding for the R&D project
  • Directors and staff time costs; if they have been involved with discussing and reporting the feasibility and strategy for the R&D project
  • Training costs; if any training has been undertaken to ensure the staff have the necessary skills and accreditations to undertake the R&D work.

Tim Lwin, our R&D Specialist says “looking at all angles for possible costs is key to ensuring that a claim is maximised, we are robust in our processes to ensure the best possible outcome is obtained for clients”

Identifying ALL the direct and indirect costs on an R&D project is key as this ensures that the claim is maximised to obtain the maximum cash refund from HM Revenue & Customs. Speak to one of our specialists who can quickly identify if you could have a qualifying claim.


Contact us now on 01606 369000