R&D Tax Relief: Making a Claim

R & D Tax Credit refund

To show that the project is R&D within the tax definition there are guidelines that define all the following terms. It is important to understand these concepts before attempting to reach a view on whether your company has an R&D project for tax purposes:

  • Project
  • Advance in science or technology
  • Science
  • Technology
  • Directly contribute
  • Scientific or technological uncertainty

Although it's not a legal requirement, HMRC encourages companies to:

  • tell them why the company considers its project(s) to be allowable as R&D
  • provide a summary of the costs incurred on the R&D and how the figures in the return were arrived at.

If your company has received a subsidy or grant for an R&D project, this may affect how much tax relief you can claim.

Qualifying expenditure

If your company and the project both meet the necessary conditions, then you can claim tax relief on the following revenue expenditure:

  • Employee costs - that is, employing staff directly who are actively engaged in carrying out R&D itself. The staff must be employed under a contract of employment directly with your company.
  • Staff providers - paying a staff provider for staff provided to the company who are directly and actively engaged in carrying out R&D.
  • Materials - consumable or transformable materials used directly in carrying out R&D.
  • Payments to clinical trials volunteers - the cost of relevant payments to subjects of clinical trials.
  • Utilities - power, water, fuel used directly in carrying out R&D.
  • Software - computer software used directly in the R&D.
  • Subcontracted R&D expenditure - if your company is claiming relief under the SME Scheme you may be able to claim back a proportion of what you spend on certain R&D activities carried out for you by a subcontractor.