Learn which costs qualify for R&D tax relief, from staffing and consumables to software and subcontracted work, helping you capture the full value of your innovation investment.
Can R&D costs be capitalised?
How you handle R&D costs can impact your financial health. Capitalising costs means treating them as assets on the balance sheet rather than immediate expenses. This spreads costs over time, reflects the long-term value of projects, and provides a clearer view of performance, balance sheet strength, and cash flow while ensuring compliance with accounting standards.
Navigating subcontractor costs
Subcontractor costs can be included in R&D tax claims if they relate to eligible R&D activities. The rules differ between SME and RDEC schemes, affecting the level of relief available. Properly documenting agreements and expenditure is essential to support a compliant and high value claim.
Reimbursed expenses in R&D claims
Reimbursed expenses can be included in an R&D tax claim if they qualify as staffing costs. To count, they must be incurred by the employee, relate directly to R&D activities, and be necessary for their role. Travel to work or training costs do not qualify, so careful assessment ensures only eligible expenses are claimed.
R&D tax expenditure thresholds and restrictions
Not all R&D costs qualify for tax relief. Expenditure on routine production, market research, or non-technical training is excluded, while only directly related staffing, consumables, software, and subcontractor costs count. Understanding these limits ensures claims include only eligible costs and remain compliant with HMRC rules.
