What Costs Can I Claim with R&D Tax Credits?
The expenses your company incurs in undertaking research and development will determine the size of your R&D tax credit claim.
Unfortunately, you cannot include all your costs in an R&D tax credit claim. However, the predetermined cost categories from HMRC will house the majority of your R&D spend. The following cost categories can be included:
If any of your employees or directors spent time on R&D projects, you can include their employment costs in your claim. For both SMEs and larger companies, you can claim the following staffing costs:
Employer national insurance contributions
Employer pension contributions
If you have outsourced development tasks to a third party, this is OK. Companies are able to include expenditure on subcontractors that performed tasks related to the R&D projects, such as testing services or software development.
Externally provided workers (EPW)
‘If you needed to use external labour, such as agency workers, their cost can still be included within your claim.
The cost of software applications required to perform your R&D activities may be included within your claim. If the software is used for R&D and non-R&D activities, we can work with you to determine how much of the cost we can include.
Research and development projects often involve a number of consumable materials being used, some of which you probably haven’t considered including in your R&D tax credit claim. Your expenditure on the raw materials used, consumed or transformed in the research and development process can be included. In addition, you can include light, heat and water charges.
In the pharmaceutical industry, it’s common practice to have companies pay individuals involved in clinical trials to test new medications or treatments as part of a research and development project. These costs can be included in your R&D tax credit claim.
“I have had the pleasure of working with [the team] on our R&D tax credit claim. [They] made the whole process straightforward and saved us a lot of time thanks to [their] ability to break down complicated concepts and explain them in a clear manner. [Their] knowledge of the scheme is second to none. [They] went through each cost one by one to ensure our claim was fully optimised.”