Eligible R&D Costs
Before identifying your costs you'll need to ensure that your business activity constitutes R&D. In order to do that we recommend reading our guide on the subject. If you're able to make a claim then you'll need to decide which costs you can associate with each R&D project. This guide takes you through the most common costs businesses associate with their R&D tax credit claim:
You can claim for salaries for staff directly involved with the R&D project. Staff costs can also include class 1 NIC, pension fund contributions, some reimbursed expenses and bonuses.
Items that are directly employed and consumed in the R&D projects can also qualify. This includes physical materials and hardware as well as utilities such as the cost of power, water and fuel used directly for carrying out R&D.
Software that is directly employed in the R&D projects can also qualify. If only a part of the software was used directly in R&D, then an appropriate proportion of the cost of the software can qualify.
The costs of testing the design and construction of a prototype following an R&D project will normally qualify. Note that if the prototype was created with the view of selling it after its construction then HMRC considers this to be outside the R&D scheme (even if R&D was undertaken to construct the prototype).
These are the staff costs paid to an external company for staff who are directly involved with the R&D project. They are not employees or subcontractors. You can claim up to 65% on the payments made to the external staff provider.
As a rule of thumb, you can claim for 65% of the payments made to "unconnected" subcontractors in the SME scheme. However, you can qualify between 0-100% of the expenditure if the subcontractor is a connected party (i.e. a parent company, a subsidiary etc.).
Large companies can claim this as an eligible R&D cost. The research must be relevant to your field or scientific pursuit. It should also be conducted either by an "individual or partnership of individuals", or "a qualifying body". A qualifying body would be a charity or higher education institute, or a named scientific research body.
Attracting volunteers into a clinical trial is often an expensive process. The costs associated with both attracting and paying for volunteers can be claimed for.
Software Development R&D Tax Credit Claims
Key insights into claiming R&D tax credits for software development projects.
RDEC Scheme Guide
The complete guide to compiling and submitting an RDEC claim. Includes an explanation of differences between the two schemes.
Clarifying the Impact of CBILS on R&D Tax Credits
How the government's Coronavirus loan scheme affects your ability to claim.
EmpowerRD Covid-19 response
How we're helping businesses with their cash flow during the downturn.
Which scheme should I apply to?
Understand how your business's financial profile affects which scheme you need to apply to
Is my business eligible for R&D tax credits?
Find out if the activity undertaken by your business can qualify as R&D.
How much can I claim?
Read how different accounting positions can affect how much you're able to claim.
What evidence is required to make an R&D claim?
Learn about the different pieces of evidence required for different R&D costs.
The most common queries we hear about the R&D scheme.