Research and Development Tax Credits – What Costs Qualify?

More expenditures than you think could be eligible.

Research and Development Tax Credits are claimed against qualifying costs. The most important and largest qualifying costs are usually your labour costs for Research and Development work.

Labour costs may be directly employed labour or work you have subcontracted to external organisations in the UK or overseas.  Where your research and development work is subcontracted, qualifying labour costs can be claimed and 65% of the subcontracted labour costs, rather than the full rate you can claim for direct labour costs.

Other costs that you can claim are described as “consumables directly related the R&D work”.  This could include recruitment, training, software licences and development hardware costs and other costs that are directly attributable to your Research and Development project.

You may also include the costs related to Research and Development project management, system architecture and testing of prototypes.