Many companies take advantage of the R&D tax credit, developing their innovative capabilities without impacting their bottom line. Industries conducting scientific research, or developing a new product know they qualify with minimal doubt. However, other sectors often count themselves out before trying. Data published from HMRC shows the UK construction industry accounts for just 6% of UK R&D tax credit claims. These 6% saw an average of $70,000 in credits. This suggests that civil engineering and construction companies are missing out on some large credits, and should be exploring this credit option.

The R&D Tax Credits are a tax relief aimed at increasing R&D spending in the region in an effort to encourage innovation. The UK offers two variants on this, with the R&D Relief for SMEs aimed at small businesses – or companies with fewer than 500 employees and either a turnover less than €100m or gross assets of less than €86m. This program offers 24.7p of relief for every £1 spent on R&D. The alternative Research and Development Expenditure Credit (RDEC) provides relief at 9.7p per £1 spent and is aimed at larger companies. Typically, a business making a successful claim could get back up to 33% of the amount spent on qualifying R&D.

So are you eligible? You don’t need a lab coat to conduct R&D. In fact, the definition applies to any business that has done something innovative in the way it operates or developed new ways of doing things. The key to innovation, as per HMRC, is overcoming a technical uncertainty. Even if your R&D is unsuccessful, it could still be eligible.

R&D in Construction

Just because construction has been done for thousands of years, does not mean there is no more innovation to be made. Common qualifying R&D activity in this sector includes innovative use of green or sustainable materials and methods. It can also include improvement to existing techniques for site-specific problems. If you develop new products, including products that are lighter weight, stronger, more resilient, easier to process and so on, you likely qualify for R&D tax credits. 

It really comes down to uncertainty. An engineer who needs to create new standards and tolerances because of a new material or equipment could suggest R&D. Your project usually occurs in stages, with simulations, iterative CAD modelling, prototyping and so on. This iterative process is the foundation of R&D.You may think your company does not meet the cut for R&D, but the definitions are much broader than you think, and it’s likely worth exploring this avenue.