Outlining The Costs That Are Eligible For Research And Development Tax Relief
A lot of business establishment qualify to claim research and development expenses. The eligibility is not dependent on the size or the profitability of the business entity. 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. 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. However, it is important to note that the RDEC scheme expenses do not qualify for the reimbursement. 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. 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.
You can place claims for research and development tax relief for consumables. These materials are regarded as the one used or transformed in your firm’s R&D process. 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. As long you make apportionment reasonably, you can include the software that was partly utilized in the R&D projects in your claims.
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. This expense category is only applicable in the pharmaceutical industry. The costs are incurred because of the payments made to volunteers that are participating 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. In order to obtain the optimum value for your claim, you need to hire the services of chartered tax advisers and technology experts.