Are you eligible for the R&D Tax Credit Scheme?

The key question is has your company taken a commercial risk with any development which is not routine?

 Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place and the costs attached to the project can be claimed.

If a particular advance in science or technology has already been attempted but details are not readily available (for example, a trade secret), work to achieve such an advance can still be recognised as an advance in science or technology.

R&D Calculators

Software
Including external developers

Calculate your R&D claims for the projects completed within the last two financial years. When inputting your staff costs please include subcontractors/ outsourced support/developer costs as these are eligible for claim.

Construction

Including CIS Contractors

Calculate your R&D claims for the projects completed within the last two financial years. When inputting your staff costs please include subcontractors costs as these are eligible for claim. 

Manufacturing

Including prototyping costs

Calculate your R&D claims for the projects completed within the last two financial years. 

Engineering

Including prototyping & design Costs

Calculate your R&D claims for the projects completed within the last two financial years. When inputting your staff costs please include all projects and prototypes whether successful or not as these costs are also eligible for claim.

Key elements of r&D qualifying criteria

Do you or have you, in the past 3 years taken a commercial risk in creating or designing new products? 

Developed new processes for manufacturing? Creating a new service or materials not readily available in the public domain? 

Designed bespoke engineering solutions or projects?

Activities to create or adapt software, materials or equipment needed to resolve the scientific or technological uncertainty, provided that the software, material or equipment is created or adapted solely for use in R&D.

If you can say yes to the following it would indicate you may have a claim
  • Have you created, changed or adjusted any Products

  • Have you created, changed or adjusted any Processes

  • Have you created, changed or adjusted any Materials

  • Have you created, changed or adjusted any Products

Qualifying Cost Categories

Staffing costs including wages, employers’ Class 1 NIC, employers’ pension contributions, and any other direct staffing costs

Software and consumable items relating to development work

Water, fuel and power relating to development work

Externally provided workers doing R&D work

Prototypes and costs relating to manufacturing trials of R&D Projects

Clinical trial volunteers on R&D Projects

Subcontracted R&D work (qualifying at 65% of cost only).

Travel paid by the employee and refunded back by the company claiming.

Direct R&D Staff Costs

Your company can claim for salaries, wages class 1 NIC and pension fund contributions for staff directly and actively engaged in the R&D project.

This covers employees who undertake ‘hands on’ R&D work and the proportion of supervisory and managerial time spent specifically directing such employees in those activities.

Support staff costs, for example administrative or clerical staff, do not qualify, except when they relate to qualifying indirect activities. These can be activities like maintenance, clerical, administrative and security work.

 

Your company can generally claim for 65% of the payments made to unconnected parties. The subcontracted work may be further subcontracted to any third party. Special rules apply where the parties are connected or elect to be connected.

Externally provided R&D staff

These are the staff costs paid to an external agency for staff who is directly and actively engaged in the R&D project — these are not employees and subcontractors. Relief is usually given on 65% of the payments made to the staff provider. Special rules apply if the company and staff provider are connected or elect to be connected.

Consumable items

Your company can claim for the cost of items that are directly employed and consumed in qualifying R&D projects. These include materials and the proportion of water, fuel and power consumed in the R&D process. The costs of materials incorporated in products that are sold are not eligible for relief.

 

Your company may claim for the cost of software that is directly employed in the R&D activity. Where software is only partly employed in direct R&D, an appropriate apportionment should be made.

Prototypes

Where a prototype is created to test the R&D being undertaken, the design, construction and testing costs will normally be qualifying expenses.

However, if the prototype is also built with a view to selling the prototype itself (such as the construction of a bespoke machine), HMRC considers that to be production and outside the R&D scheme, even if R&D was undertaken to create the prototype.

Testing as part of R&D

 Scientific or technological testing and analysis, which directly contributes to the resolution of scientific or technological uncertainty, is R&D. So for example if testing work is carried out as part of the development, this would be R&D, but once the design of the ‘final’ product or service had been finalised and tested, any further testing would not be R&D. However, if flaws in the design became apparent later on, then work to remedy them would be R&D if they could not readily be resolved by a competent professional working in the field (in other words, if there was scientific or technological uncertainty around how to fix the problem).