Types Of Expenses That Qualify For Research And Development Tax Reimbursement
Many business owners do not realize that they can make claims for costs they have incurred in research and development. The eligibility is not dependent on the size or the profitability of the business entity. 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. Some of the expenses that are included in this category are employer pension contributions, employer NI contributions, gross salaries and certain reimbursed business costs. Wages, cash bonuses and overtime pay are found under the gross salaries.
Subcontracted R&D is another type of costs that qualify for research and development tax relief claims. RDEC scheme costs will however not be eligible for the tax relief. As an SME you are allowed to make claims on subcontractors’ expenditure that were involved in the R&D projects.
You are allowed to make research and development tax relief claims for your externally provided workers. 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.
Another area that you can lodge tax relief claims for research and development is consumables. These are considered as the materials that are consumed or transformed in the course of your R&D procedures. In this category you will find power, fuel and water. You will not be able to include in your claims the costs that you have incurred once you are through with the work of resolving scientific and technological uncertainty.
Any expenses for your computer software can be included in the research and development tax relief claims. 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.
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. These are the payments made to the people who are taking part in clinical trials. The trials are meant to test the drug efficiency and they are part of the R&D project.
It is a difficult task going through the process of qualifying costs in a research and development tax credit. You will need professional guidance in this case and it is a smart move to hire the services of a qualified service provider. 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.