Outlining The Costs That Are Eligible For Research And Development Tax Relief
Majority of businesses are eligible to make claims for research and development costs. This is not withstanding how big or profitable the business is. It is recommended to have discussions regarding your development issues with your technical staff instead of the finance team.
One area that firms are eligible to raise claims for research and development tax relief is staffing expenses. You will find employer NI contributions, employer pension contributions, certain reimbursed expenses and gross salaries under this ambit. Some of the benefits that will be found under the gross salaries are overtime pay, cash bonuses and wages.
Another type of expense that is eligible for research and development tax relief claim is the subcontracted R&D. You should however bear in mind that any expenses incurred under the RDEC scheme will not qualify for the tax relief. You are permitted to include the costs of subcontractors that took part in your R&D projects if you are SMEs.
Expenses incurred by the externally provided workers are included in the research and development tax relief claims. Contractors, agency staff and freelancers are some of examples of EPWs. 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 considered as the materials that are consumed or transformed in the course of your R&D procedures. Fuel, power and water are some of the items that fall under this category. Costs that are incurred after you are through the technological and scientific resolution will not form part of your claim.
The revenue expenditure for your computer software can form part of the tax relief claims for research and development. Programs that were partly utilized in the R&D projects can be eligible as long as reasonable apportionment is applied.
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 reason for these expenditures is due to the payments made to the people that have volunteered for clinical trials. The trials are part of the R&D projects whose objective is to test the efficacy of drugs.
The process of navigating the research and development tax relief claims is not easy. It is highly recommended to enlist the services of a professional service provider to offer you the relevant guidance. 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.