Identifying The Costs That Qualify 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. Some of the expenses that are included in this category are employer pension contributions, employer NI contributions, gross salaries and certain reimbursed business costs. Among the benefits that you will find under the gross salaries include cash bonuses, overtime pay and wages.
One area that you can make claims for research and development tax relief is the subcontracted R&D. 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. There is need to make to make the correct application of the right apportionment if an EPW is involved in R&D as well as non-R&D work.
Another area that you can lodge tax relief claims for research and development is consumables. These are defined as the materials that are utilized or transformed in your company’s R&D undertakings. Fuel, power and water are some of the items that fall under 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.
Clinical trials volunteers in the pharmaceutical field can have their costs included in the research and development tax credit claims. The only place that this cost category is applicable is in the pharmaceutical sector. The reason for these expenditures is due to the payments made to the people that have volunteered for clinical trials. The trials are meant to test the drug efficiency and they are part of the R&D project.
The process of navigating the research and development tax relief claims is not easy. It is advisable to seek the professional input of competent service provider to provide the guidance that you require. 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.