AM I ELIGIBLE TO MAKE AN R&D TAX RELIEF CLAIM?

Typically R&D could be quite hard to see if your projects or qualify or not and at the end of this guide we hope this can show you the type of work that can be included within an R&D claim. The tax relief for R&D is very favourable with an additional 130% tax relief in addition to the normal 100% resulting in 230% tax relief for R&D activities. You can find out more about the conditions and further examples here.

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The key questions to ask yourself for any project you have undertaken are:

1. Have you gone beyond “the norm” within your industry?

This might be done by developing new ways to do something or by re-evaluating how something may be achieved as you were constrained by conventional methods. This can range from the sort of materials used to the overall project management process.

2. Have you then had technical difficulties and challenges in achieving what you have set out to do?

Remember that this type of work could be for projects you have tendered for but have not ended up doing the work. So, if you have tendered for a project where the design involved technical advances and challenges, but you didn’t go ahead with the project, you could still claim for your time and costs in tendering.

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TYPICAL PROJECTS

1. Integrating new technologies into builds / restorations that improve efficiency/reduce costs:

Example: Testing heating systems or insulation that needs to be tested because of technical uncertainty over whether it will work in a specific environment.

2. Trying or testing new materials that are improved

Example: Materials that are stronger, cheaper, more environmental - whilst still conforming with regulations.

3. Innovative energy saving techniques that are challenging to implement.

Time spent on tendering for contracts, even if unsuccessful.

Example: If you had to think about technical problems and design solutions in order to tender for a contract, this can also qualify, even if you didn’t get the relief.

4. Designing or using new equipment that is new to the industry and needs to be technically upskilled on.

Changing processes to improve efficiency, reduce costs, or reduce waste. For example, recycling a waste product which has to be processed in order to make it disposable.

Example: Removing hazardous materials from old buildings and separating outparts to be re-used or made recyclable.

Anything software related – if you’ve adopted technology like apps or platforms which you have built or modified yourself, then you may be able to claim fort hat.

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CASE STUDIES

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Incorporating new materials into building design and construction:

Our client was designing a set of new build apartments. They trialled and tested a new heating system to be incorporated into the building. Costs claimed were staff time, some testing materials and a subcontractor who installed some of the units.

CLAIM SIZE: £40k of costs, £10k corporation tax saving.

Incorporating new materials into building design and construction:

Our client was building a large recycling plant and was finding methods to reinforce the concrete forecourt to increase the life of the ground used by heaving goods vehicles. Costs claimed were subcontractors – designers and engineers – and materials used in the testing phase.

CLAIM SIZE: £120k of costs, £40k tax credit from HMRC.

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Development of residential properties in a historic mill in north of England:

Client was attempting to design the layout of the building to (a) maximise energy efficiency and (b) retain original features. This involved several technical challenges such as incorporation of different materials and complex CAD designs.

CLAIM SIZE: £75k of costs, £25k tax credit refund from HMRC.

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Software design to create lighting systems to maximise light and efficiency in a given space:

The brief from the customer was to achieve a level of natural lighting throughout the building. The team investigated and designed techniques to achieve this using different models. Given the wide number of variables and uncertainty over how different aspect would interrelate, it took considerable time and technical work to come up with the best solution.

CLAIM SIZE: £25k costs, £6.5k corporation tax saving

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Design of an off-grid containerised weather station that could be moved into place and withstand extreme weather conditions:

This involved the experimentation of different materials and structural design. Due to the unique elements of the location and environment, the majority of the design and implementation was a technological advance and incurred several technical challenges.

CLAIM SIZE: £220k costs, £74k HMRC refund

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Finding R&D in your construction projects can be often be seen as a grey area within the tax legislation, this is why we offer a free call to run through your projects to see if you qualify! If you would like to speak our tax team email hello@saintfinancialgroup.co.uk or call 020 8187 4201

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