Outlining The Costs That Are Eligible For Research And Development Tax Relief
Many business owners do not realize that they can make claims for costs they have incurred in research and development. This is regardless of the size of the business and its profitability status. It is advisable to engage your technical team on matters pertaining to development as opposed to the finance department.
One area that firms are eligible to raise claims for research and development tax relief is staffing expenses. You will find employer NI contributions, employer pension contributions, certain reimbursed expenses and gross salaries under this ambit. Wages, cash bonuses and overtime pay are found under the gross salaries.
Subcontracted R&D is another type of costs that qualify for research and development tax relief claims. However, it is important to note that the RDEC scheme expenses do not qualify for the reimbursement. As an SME you are allowed to make claims on subcontractors’ expenditure that were involved in the R&D projects.
Expenses incurred by the externally provided workers are included in the research and development tax relief claims. The EPWs include the agency staff, freelancers and contractors. You are supposed to direct and supervise the operations of the externally provided workers as the claiming firm. In the event that the EPW is engaged in R&D and non-R&D activities, there must be appropriate apportionment.
Consumables items are eligible for the research and development tax relief claims. These are considered as the materials that are consumed or transformed in the course of your R&D procedures. You will come across materials such as water, fuel and power included in this category. Among the expenses that will not be included for claims are the extra ones that result after you have finalized with the process of resolving the technological and scientific uncertainty.
Any expenses for your computer software can be included in the research and development tax relief claims. As long you make apportionment reasonably, you can include the software that was partly utilized in the R&D projects in your claims.
Other type of expenses that are eligible in the research and development tax relief claims are the ones incurred during clinical trials volunteers in the pharmaceutical industries. It is only in the pharmaceutical field that you will find this category of expense. The costs are incurred because of the payments made to volunteers that are participating in clinical trials. The trials are undertaken as a part of the R&D projects with the aim of testing the efficiency of drugs.
The procedure of navigating through the research and development tax credit claim is an intricate one. You will need professional guidance in this case and it is a smart move to hire the services of a qualified service provider. If you are looking to maximize on your claims value, you have no option but to enlist the services of chartered tax advisers and a team that has the requisite technology skillsets.