HMRC research and development incentives are valuable rewards for companies, but only a small amount of construction companies are taking advantage of these incentives. The construction sector is not only about innovative design, it also plays a huge part in engineering and technological advances.
What are HMRC Research and Development Incentives?
UK government values this contribution to the advancement of science and technology and allows you to claim HMRC research and development tax credits or tax relief. Any company contributing to the innovation and fulfilling the prerequisites of R&D claim can claim incentives as payable cash credits or tax rebates against the company’s eligible expenditure. SMEs can receive up to 33%, whereas large companies can get up to 13% of their qualifying expenditure. HMRC research and development R&D tax credits scheme is available for all sizes and sectors. R&D projects involve risks and are often very costly. Therefore R&D tax credits are a highly beneficial financial boost for your company and are an excellent opportunity to streamline your cash flow.
What Are The Eligible Costs for R&D Claim?
According to HMRC, qualifying R&D activities are:
- Employee’s costs: Salaries of employees involved in R&D activities
- Subcontractor’s costs: You can claim up to 65% of subcontracted R&D costs.
- EPW costs: Costs of externally provided workers
- Consumable material expenditure: Costs of materials and expenses used during the R&D project.
- Software costs: Expenditure on software licenses involved in the R&D project.
Which Construction Sector Projects Qualify For The Claim?
Every sector involves various R&D activities, but they are often overlooked. Any project which seeks improvement in existing technology or construction method qualifies for the HMRC research and development claim. Construction is not as simple as it seems, companies often face challenges where there is no method to tackle the issues and are left with no choice other than to create a new approach and adapt tools to resolve the problems. For example, site restrictions, logistics, access, and safety measures involve creating new technology or process. Adopting Modern Methods of Construction (MMC) or Building Information Modelling (BIM) involves challenges that require finding new ways and methods to work efficiently.
Construction projects involve seeking technological advancement, resolving scientific uncertainty and overcoming challenges. Therefore, any such activity comes under research and development and qualify for the claim.
Examples of Qualifying R&D Projects in the Construction Sector:
- Creation of environment-friendly products
- Developing new energy-saving methods
- Creation of prototypes and testing
- Development of the sustainable method
- Creation of cost-efficient material
- Improving material or method
- Resolving site issues
- Improvement in logistics and access
- Advancement in protective measures
- Automation of dangerous tasks
- Experimenting with new material for construction
- Creation of new mechanical system
- Modification of existing components in construction
How Can You Claim R&D Tax Credits?
To claim HMRC research and development tax credits, you have to prepare a strong technical narrative presenting all qualifying projects and explaining how you are seeking advancement in the construction process. You have to submit your claim along with a CT600 form with exact computations containing all the eligible costs. If your calculations are erroneous, you can be subject to HMRC enquiry, so in order to avoid that, you should make sure that your claim presents precise calculations. The technical narrative is written to prove your eligibility to the HMRC, and HMRC scrutinizes claims to avoid abuse of R&D schemes. To prevent the risk of HMRC enquiry, it is recommended to take the advice of R&D tax credit specialists who can help you through the claim.
How Can Square Finance help you?
Square Finance has helped various construction sector companies claim HMRC research and development tax credits. The majority of companies overlook their qualifying R&D activities or consider R&D activities as a usual part of their work. Our R&D tax credits specialists help businesses find their innovative qualifying projects so they can get maximum reward for their innovation. If your company is creating something new, overcoming challenges by modifying existing technology or creating improved methods, then contact our team of R&D tax credits experts. We will hunt down our qualifying projects and help you prepare a strong HMRC research and development claim.