What costs can be included in an R&D tax credits claim?
- Employee wages: The salaries, wages, and benefits of employees directly involved in R&D activities are generally eligible for claiming. This includes researchers, scientists, engineers, and other technical staff.
- Materials and supplies: Costs associated with purchasing materials, components, and consumables used directly in R&D projects are eligible. This includes raw materials, prototypes, and experimental equipment.
- Software: Expenses related to purchasing or licensing software used exclusively for R&D activities can often be claimed. However, software used for routine or administrative purposes may not qualify.
- Subcontractor costs: In some cases, costs incurred for subcontracting R&D work to external entities can be claimed. The rules for subcontractor costs can vary by jurisdiction, and only a portion of these costs may be eligible.
- Externally Provided Workers (EPWs): If you engage externally provided workers (EPWs) for R&D work, a portion of their costs may be eligible. EPW expenses are subject to specific rules and may vary by jurisdiction.
- Overhead expenses: Some overhead expenses directly related to R&D activities, such as utilities, rent, and depreciation of R&D-specific facilities or equipment, may be claimable. However, general overhead not directly tied to R&D work is usually excluded.
- Prototyping costs: Expenses associated with creating prototypes or pilot models as part of the R&D process are typically eligible.
- Testing and certification costs: Costs related to testing and certification necessary for the R&D project may qualify.
- Clinical trial costs: If your R&D involves clinical trials for pharmaceutical or medical products, certain expenses associated with these trials may be eligible.
- Consulting fees: Fees paid to consultants or experts providing technical expertise related to R&D projects may be eligible in some cases.
- Travel expenses: Travel expenses directly related to R&D activities, such as attending conferences, conducting fieldwork, or collaborating with research partners, may be claimable.
Please read the blog for in-depth information on R&D qualifying costs.
