There were 705 R&D tax credits claims in 2015-16, which was a significant increase from the previous year (2014-15) from 480.
What are R&D tax credits?
The UK government introduced tax relief and credits in 2000 to aim to encourage greater innovative investment across the industry. The initiative works in two ways – either reducing the business’ corporation tax liability, or by providing a tax credit payment to offset expenditure.
The initiative is specifically aimed at increasing innovative solutions through research and development for the benefit of the UK construction industry, and is a part of a wider strategy to improve the country’s performance and competitive eligibility across the industry.
SMEs can make claims for up to 33.35% of eligible activities, which can include a wide range of possibilities, including costs that can make improvement to existing technology or working processes. Payroll costs can also be included in the claims.
The R&D tax credit support has invited more than 170,000 claims since it began, resulting in a whopping £16 billion of HMRC investment.
As a rule, construction businesses are typically claiming for:
- Research into new technological developments
- Researching new scientific methodology
- Research into new application processes
- Research into new installation techniques
This list can be broken down further and more specifically to demonstrate the types of claims on a basic level:
- Staffing costs – salary, bonus, pension and NI
- External resourcing – conditions apply
- Subcontractor costs – conditions apply
- Consumables – heating, power, lighting, software licensing
Spending by the construction industry has also grown realistically with the increase in investment, equalling an estimated figure of £390 million over the 2015-16 period.