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What can be claimed under R&D tax relief?

Decom North Sea members, Jumpstart, explore key considerations on what can be claimed under R&D tax relief...

What can be claimed under R&D tax relief?
R&D tax credits are one of the most attractive tax reliefs available at the moment and a lot more of your activities could be eligible for relief than you might think. 

WHY IS THIS IMPORTANT TO KNOW?
Identifying accurately which of your technical activities are eligible is important. It can lead to the claim being far smaller than it should be, or in some cases unrealistically large.

HOW DO I KNOW WHAT I CAN AND CANNOT CLAIM UNDER THE SCHEME?
According to HMRC, R&D for tax purposes is a project (or a component of a larger project) that “seeks to achieve an advance in science or technology [through] the resolution of scientific or technological uncertainty,” even if it isn’t successful.

So basically, in HMRC’s world, you’re undertaking R&D when you’re:

  • overcoming technological uncertainties aimed at
  • achieving an advance in technology, 
  • which isn’t readily deducible by a competent professional.

If those conditions apply to your project, then congratulations - you can claim research and development tax relief on the day-to-day costs and expenditure! (staff, subcontractors, materials, software, utilities…)

R&D can include not only the design of products and services and software involving new technology but also substantially improving existing products and services. The definition also includes the construction of prototypes. 

GIVE ME SOME EXAMPLES
Here are a few examples of what can be claimed for the Top industry sectors that recovered the most R&D tax credits from the government last year:

Engineering

  • Improvements to manufacturing processes or machinery
  • Ergonomics – ease of operation or suitability of manufactured products
  • Computer modelling for evaluation purposes

Manufacturing

  • Using new, unproven, methods of manufacturing existing products
  • Developing ways of manufacturing new products
  • Increasing process efficiency/ safety 
  • Reducing waste

Obviously this is not an exhaustive list but it will give an idea of the types of work that could well be eligible for R&D tax credits. 

It’s difficult to be more specific without knowing the industry sector you’re working in. This is why it is always wise to seek professional advice before undertaking a claim.

MAXIMISE YOUR RESULTS
Involving specialist advisors such as Jumpstart for your claim means that your claim will be more efficient. You will benefit from the specialist’s tried and tested template and receive support from their team to guide you through any questions as you compile the claim. 

For a free R&D tax credit consultation and analysis of the potential returns you might expect, contact our Jumpstart representative in Aberdeen and the North East: Ian Donaldson on 07527 635787, ian.donaldson@jumpstartuk.co.uk

www.jumpstartuk.co.uk

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