Independent Tax Consultants

Head Office 01633 386017 Midlands 01562 829484

R&D Qualifying Expenditure

 
Once qualifying projects have been identified, we next need to look at the associated costs on the project, and apportion if necessary.
 
HMRC is currently consulting on expanding the qualifying expenditure categories, but currently you can claim:
 

 

Staffing Costs

Includes salary, employers NIC & pension contributions, bonus, commissions and reimbursed expenses. Benefits In Kind (BIKs) are not included.

Consumables

Anything ‘used and transformed’ during an R&D project. This may be ingredients during food development or raw materials when developing a product. A proportional amount of utilities can also be claimed but not if company operates out of a serviced office.
 
You are unable to claim for materials that are ultimately sold to a client, whether that be factory trials that are sold or if R&D was conducted in the construction of a building.
 

Software

Any software that is specifically purchased for an R&D project or is used partially (eg CADCAM machine) can be claimed. Currently cloud and data costs can’t be claimed but there is a HMRC consultation currently being conducted which may allow these in the future.

Externally Provided

Workers

Theses are third party workers that you have ‘supervision, direction and control’ over. There has to be a minimum tri-partite relationship ie an intermediary, you cannot contract directly with a person. Normal relationship may be someone using a personal service company or Reed/Hayes type company providing multiple workers for a task. These costs are capped at 65%.
 
Companies classified as large (>500 employees, €100m turnover €86m assets) or in receipt of a grant or other notified state aid cannot claim EPWs.
  

Subcontractors

Similar to EPWs but don’t require a company to have supervision, direction and control and doesn’t need to be an intermediary in the contract. Generally will be tasked orientated to produce a deliverable as part of your own project. These are also capped at 65%.

 

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