The latest HMRC statistics indicate that in the year to 30 June 2017 a mere 705 property and construction companies claimed R&D cash tax benefits.
This means that many property and construction companies which are developing innovative building solutions are unaware they could claim research and development (R&D) cash tax benefits.
For those that did make a claim, the average cash tax benefits were:
There are two R&D schemes
SMEs are companies where
R&D tax relief is an additional 130% tax deduction beyond the 100% normally available. For every £100 of R&D spend, profitable companies can reduce their tax liability by:
Loss making companies can cash in R&D tax losses at up to £33.35 for every £100 of R&D spend.
The RDEC is a taxable credit, but can be offset against a company’s tax liability. The net effect of this is a reduction in tax liability. The RDEC rate has increased from 11% to 12% with effect from 1 January 2018.
For every £100 of R&D spend there is an overall reduction in tax liability of:
Loss making companies can also claim cash from HMRC.
R&D tax incentives are available to companies that are innovative where the company is:
R&D starts with a technical feasibility study, includes the main research and development activity, and ends when the prototyping and testing has been completed.
Construction projects are often costly and time consuming as you can see by the size of the R&D cash tax benefits being claimed - £61k for small and medium sized enterprises (SMEs) and £349k cash tax benefits for large companies.
Some examples of R&D activities that qualify in the property and construction sector include developing new, or significant improvements to:
This list is not exhaustive.
Caroline Hunt, Director, corporate tax group