Innovation and business development are abundant in the UK, however this usually requires a significant investment from businesses which can be difficult to source, especially for start-ups and SMEs.
One of the most commonly known forms of tax relief is Research & Development (R&D). This is awarded to businesses that invest in innovation, usually in the form of developing new systems, processes, products, materials, devices, or any changes to the way a business works.
Despite being available in the UK since 2000, it is still largely under-claimed. The latest statistics released from HMRC in October 2019 show that despite the abundance of innovation being carried out by businesses, only around 52,000 R&D claims were made in 2016-17. This is around 0.9% of the total number of SME businesses in the UK.
The UK government is also looking to increase R&D expenditure as a % of GDP over the next decade from 1.7% in 2016 to 2.4% in 2027, so there is an awful lot of focus on ensuring companies are continuing to invest in, and be given the appropriate reliefs for developing new innovations within their sector.
One of the most common reasons for not claiming is lack of awareness – many businesses are unaware that they are eligible for R&D tax relief. HMRC was careful to define R&D in such a way it could apply to varied work across multiple industries – the idea was to turbocharge innovation across every sector.
The construction industry is one filled to the brim with innovation. With companies constantly trying to find ways to make builds faster, more cost effective, safer and more environmentally friendly, it is more than likely that they will be eligible to claim R&D tax relief.
Some examples of activities that would be eligible include:
With this in mind, accountants have a key role in educating business clients about the potential gains of R&D tax relief and where necessary, encouraging them to seek out the advice of an experienced tax relief consultant who can accurately advise on what work may qualify.
Catax are an industry leading tax consultancy who specialist in this form of tax relief. We employ over 100 members of staff across the UK and can guarantee to maximise the claim that is made on your behalf.
So far, we have helped clients claim back over a quarter of a billion pounds in tax relief, which is often invested back into the business to fund further research projects, hire new staff or to improve business premises. This is a relief that HMRC encourage businesses to claim as the money often goes back into the UK economy, so there really isn’t any reason not to try it.
If you’re interested in finding out whether your business could make a claim, speak to Catax today.