R&D and Construction
A sector built on innovation that only claims 3% of the total R&D tax relief across all companies, despite employing 10% of all jobs in the UK. The construction industry is currently struggling with rising material and labor costs, increased competition and shrinking profit margins as well as stagnant productivity levels. With R&D tax relief, your business will have extra capital to attract better talent, inspire employees, take on greater projects that may involve more risk and experiment with new technological solutions. The more your business spends on qualifying R&D, the more you can claim back.
Construction sector often misses out on R&D tax relief, despite striving for innovation.
People in the construction sector often don’t realise that they are doing work that fits the Government’s definition of research and development. Instead, they simply call it “problem solving”.
However, if we consider all the aspects that fall under construction, from engineering to materials to overcoming planning and conservation issues, we begin to realise the extent of R&D work that actually happens.
This coupled with the fact that typically ROI for construction projects occur long after the project has begun means that R&D tax credit can be a very valuable source of funding throughout the project’s lifecycle. Despite this, the construction sector claims 11% less than the average SME, despite their high operating costs.
There are many reasons for that, but a big one is the belief that they do not partake in any R&D qualifying activity. So let’s clarify.
What is R&D tax credit?
The UK Government’s Research and Development Tax Relief scheme is a way to encourage and reward companies that are investing in innovation.
What qualifies as innovation?
For tax purposes, R&D takes place when you are creating something that will advance the overall knowledge or capability in the field of science and technology. In simple terms, if you are solving industry problems, creating new software, a new process or materials, you qualify. Alternatively, you can simply be changing or modifying existing products, processes or services, these activities may qualify.
In construction, each project comes with its own set of challenges and how you deal with them may potentially save you money, instead of costing you money. New materials, processes, technologies and approaches can all count toward an R&D tax credits claim.
- Are you building with acoustics in mind?
- Do you have a unique energy saving method?
- Have you done a bespoke design with unpredictable obsticles?
- Do you create or improve software to aid or the construction process?
- Are you developing new ‘green’ solutions in your business, such as low-carbon technologies and energy efficient installation?
- Are you developing techniques that help protect building from natural disasters that haven’t been done before?
- Are you working on a new prototype for a material?
- Are you developing new materials?
- Are you using an innovative way and repurposing old materials to solve a problem?
- Did you create site-specific material to fit within the new environment?
- Have you developed or improved technology within the construction sphere?
Overcoming Site Issues
- Was there contamination on site that you dealt with, strategically?
- Did you develop new equipment to help you carry out your construction project?
- Have you created innovative ways to keep your workers safe, such as new protective gear, automation etc?
- Are you developing new ways for water management not done before you
Want to find out whether you can claim 33% of your R&D costs back?
There is a reason it's called innovation.
Think your project qualifies but we did not mention it above? Get in touch with us and let us see whether you qualify for an R&D tax credit.