Construction Businesses Claims for Research and Development Tax Credit Rise by 47%

R&D Tax Credits Claims Rise | Construction Industry NewsHMRC has released its latest figures that show a 47% increase in research and development tax credit claims by the construction industry compared to the same period over 2015-16.

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.

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