What qualifies for tax credits?
A quick guide to what is required for a project to be included in an R&D tax credits claim and what costs can be included.
Does my project qualify?
Watch the two videos below to find out if your project qualifies for R&D tax credits. If you still aren’t 100% sure, contact RAndD Tax consultants to discuss your project.
Is it worth it?
Our clients on average have received over £119k from the R&D scheme. It is very worthwhile.
Project narratives
These four questions require placing the context of the legislation and your potential R&D activities to see if a project qualifies. They are based on the 2004 BIS Guidelines. It takes both knowledge and experience to understand them and relate them to your projects. The best starting point is one of our free assessments.
What scientific or technical knowledge or capability existed at the start of your project that you planned to improve?
What is the overall advance in knowledge or capability?
What scientific or technological uncertainties did you face?
How did your project overcome these uncertainties?
Qualifying Activities & Costs
The key activity is resolving the scientific or technological uncertainties, this might be in a number of ways for example iterative development, prototyping, proofs of concept, or experimentation and testing. You can claim some costs that relate to these activities, but crucially not everything. You can also claim staff costs for some indirect supporting activities like project management, HR, and finance in support of R&D activities. The boundary of the R&D costs you can claim are those that relate to resolving the scientific or technological uncertainties you face. These differ in nature from the commercial project and the entire development project which might include routine work and elements not related to R&D.
If you have any questions, contact RandD Tax.
Costs you can claim
Staff costs
Subcontractors
Externally Provided Workers
Consumables
Software
Each cost has specific “rules” around the correct treatment. Many are quite trappy. Common mistakes and misperceptions include:
- Claiming dividend as a staff cost. Cannot claim dividend payments at all.
- Technical EPW/Subcontractor issues. Failing to handle EPW and subcontractors correctly, two different treatments, and various rules to consider.
- Treating money as a consumable. It would be nice but unfortunately no. Consumables have a specific meaning and rules.
- Hosting or Data purchases as software. Unfortunately, these are not treated as software under the rules and frequently claimed in error by those that claim without advice.
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