Construction firms are missing out on millions in available tax incentives. A recent HMRC study showed that there has been a lower-than-expected take up of Research & Development Tax Relief (R&D) in the sector.
R&D tax relief (further info can be found here) is one of the most generous corporation tax breaks available, designed to encourage innovation and increase spending on R&D activities. It provides vital funds that help cash-tight companies to keep the lights on and pay suppliers. £100k of qualifying expenditure under the SME scheme can get you either:
- £230k worth of enhanced losses (worth £44k @ 19% tax rate); or
- A £33.35k tax credit (cash in hand)
The construction sector is innovative by nature. Modern methods of construction & Building Information Modelling (BIM) have led to the development of new ecological and sustainable technologies that are used day-to-day in the sector. There was surprise therefore when the study showed that construction accounted for less than 3% of all R&D claims submitted.
The lower-than expected figures can likely be explained by a lack of awareness of the R&D Tax Relief in the sector, along with concern that the work undertaken does not qualify. There is also a misconception that R&D tax relief is only available for technology start-ups or scientists in lab coats. This is just simply not the case.
Where Companies are adapting equipment, creating new processes or developing better, safer or greener methods of construction, they will almost certainly be undertaking R&D.
Chiene + Tait has a specialist R&D team that can help identify what can and cannot qualify for relief. In the past 24 months, we have successfully submitted over 80 R&D tax credit claims resulting in over £2.5 million being received by our clients, achieving a 100% success rate.