Identifying The Costs That Qualify For Research And Development Tax Relief
A lot of business establishment qualify to claim research and development expenses. 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.
Companies can make their research and development tax relief claims on their 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.
Subcontracted R&D is another type of costs that qualify for research and development tax relief claims. You should however bear in mind that any expenses incurred under the RDEC scheme will not qualify for the tax relief. SMEs have the permission to make tax relief claims for R&D projects expenses by subcontractors.
You are allowed to make research and development tax relief claims for your externally provided workers. 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. Proper apportionment must be applied if an EPW is carrying out both R&D and non-R&D operations.
Consumables items are eligible for the research and development tax relief claims. These are defined as the materials that are utilized or transformed in your company’s R&D undertakings. In this category you will find power, fuel and water. 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.
The revenue expenditure for your computer software can form part of the tax relief claims for research and development. You are allowed to include software that was partly used in the R&D projects on the condition that there is reasonable application of apportionment.
Other type of expenses that are eligible in the research and development tax relief claims are the ones incurred during clinical trials volunteers in the pharmaceutical industries. The only place that this cost category is applicable is in the pharmaceutical sector. The costs are incurred because of the payments made to volunteers that are participating in clinical trials. The trials are undertaken as a part of the R&D projects with the aim of testing the efficiency of drugs.
The procedure of navigating through the research and development tax credit claim is an intricate one. You will need professional guidance in this case and it is a smart move to hire the services of a qualified service provider. In order to obtain the optimum value for your claim, you need to hire the services of chartered tax advisers and technology experts.