What are consumable items for R&D tax credit claims purposes?

Consumable items are physical items whose costs can be claimed for R&D tax credits. Examples include water, fuel, power and materials that get used or changed during R&D.

The expenses must be for activities recognised as R&D, including indirect activities. These costs may qualify under the relevant R&D tax credit relief scheme.

The cost for consumable items is often incurred during the testing, development and refinement stages of a project, where materials or utilities are required to help resolve scientific or technological uncertainties.

Examples of qualifying consumables may include:

• Raw materials used to create prototypes
• Chemicals consumed during testing
• Electricity used to power equipment involved in R&D activities

The key area of consideration is that the item must be consumed, transformed or otherwise used up as part of the qualifying work.

If a chemical is consumed or transformed as part of the R&D activity, you can still claim it. However, if an item is still usable in its original form after R&D, you can’t claim its cost.

This distinction is important because HMRC focuses on the extent to which a consumable has been employed in carrying out qualifying R&D activities. Where materials retain their original value or can continue to be used for commercial purposes after the R&D has concluded, the associated costs will generally not qualify for relief. Businesses should therefore maintain clear records showing how consumables were used throughout the project and why the expenditure relates directly to qualifying R&D work.