When looking to make an R&D claim, many people still do not realise what costs qualify for expenditure. That is why we are here today – We are going to be explaining what costs qualify as R&D expenditure so that you can gain a better understanding of what your company can claim for.

The main qualifying costs when it comes to R&D claims are staffing costs, subcontractor costs, externally provided worker costs, consumables costs and software costs. We will explain each of these costs to you in more detail.

Staffing costs

When making an R&D claim you can claim the staffing costs of directors and employees providing that they are or have been actively engaged qualifying R&D activities. This includes employees and directors directly working on R&D projects and those that are indirectly supporting them. 100% of staffing costs relating to R&D activities can be claimed back.

Staffing costs can include a range of costs including, but not limited to, gross salaries (including wages, overtime pay and cash bonuses), employer NI contributions, employer pension contributions and certain reimbursed business expenses.

The biggest R&D cost within many claims is often the staffing costs for individuals involved in R&D projects. When looking to claim staffing costs you need to not only identify which staff members were involved in projects but also what activities they performed and identify what proportion of their time was spend on those activities.

Subcontractor costs

When making an SME R&D claim you can include 65% of payments made to unconnected subcontractors that are employed to work on research and development projects. You can also claim for connected subcontractors but at a different rate, with the rules being more complex around this area.

Externally provided workers

Externally provided workers are individuals provided to your company through a staff provider. A couple of examples of externally provided workers include agency staff, contractors, and freelancers. The same as subcontractor costs, unconnected externally provided workers can be included in R&D tax credits claims but are restricted to 65%, and costs for connected externally provided workers can also be eligible however special rules apply.

Consumable items

Consumable items that are used within R&D projects can be claimed for. A couple of examples of consumable costs that typically occur within R&D projects are water, fuel and power costs. When making a claim you need to make sure that you only include the consumable items that relate directly to your R&D work. These costs can sometimes differ from the consumable cost for your complete developed material, process, product, or service.

Software costs

Revenue expenditure on computer software that has been involved in R&D activities can be included in R&D tax claims. Like the other categories software that is partly used for R&D can be included at a reasonable apportionment.

These are only some of the costs that qualify too! As you can see there are many different qualifying costs to be claimed back, and these aren’t even all of them.

Here to help

Determining whether projects qualify for R&D tax relief, and what cost are eligible can be complicated. Don’t worry though, we are here to help. Here at Enhance Consultants we are experts in R&D tax relief and our team are available to assist companies in checking their eligibility and identify the maximum amount of qualifying costs within their projects.

If you are interested in seeing you if you could have a claim, and want our assistance, do not hesitate to get in touch.  Our team are waiting to help you. We have already assisted many companies within the UK in claiming money that they didn’t even know that they were entitled to and would love to assist you too!