R&D Tax Credits – What Costs can I Claim For?


R&D tax credits are a fantastic form of corporation tax relief which to date remains largely underclaimed here in Wales. Thankfully, more and more companies are becoming aware of the opportunities available to them and are successfully reclaiming what can often amount to tens of thousands of pounds in relief.

So how do we calculate the amount of money a company can claim back?

The amount of money a company is entitled to depends on several factors, but essentially it is based on the costs the company has incurred in a given accounting period for its development activities.  These costs are often referred to as ‘Qualifying Expenditure’.

So, what do we mean when we say, ‘Qualifying Expenditure’?

Broadly speaking, there are 5 categories of expenditure which may be included in an R&D tax credits claim.  For the most part, these are pretty much the same for SME and large company claims.

Expenditure on employees

including gross salaries, employers NIC, employers pension contributions and any reimbursed travel expenses

Expenditure on consumables and materials

This includes the cost of raw materials consumed (e.g. in building prototypes or conducting trial production runs).  It can also include some premises costs such as electricity, gas and water used.

Expenditure on externally provided workers

This can include agency staff.

Expenditure on subcontracted R&D activities

This can include testing services.

Expenditure on R&D related software packages

This can include CAD packages.

We should also mention that there is sometimes a 6th cost category, not seen often as it typically only features in pharmaceutical industry claims, where companies pay clinical trial volunteers to test the efficiency of e.g. a new drug.  This too may be included in an R&D tax credits claim.

So in a given accounting period, we analyse this expenditure and identify that which can be included in a claim, and after applying statutory restrictions etc we calculate the amount of money due.

A caveat is needed here – As with every professional service, circumstances are never black or white, and there are specific rules surrounding each of the above categories that need to be considered at every stage in the claim process.  This is why it is so important to seek the advice of a qualified expert to ensure your claim is prepared correctly and maximised to its full potential.


Over the past 6 years, Rachel has been working specifically within the digital marketing space and has worked with some of the country’s top brands. During this time, Rachel was a key attribute to the success of our sister product, Recruitment Buzz, which has firmly established itself as one of the leading publications within the Recruitment sector. Drawing on her knowledge and experience, Rachel has developed a genuine understanding of how content can engage and compel an audience.

Having a passion for travel and culture, Rachel left her hometown of Cardiff to pursue studies and travel and after several years away, Rachel returned to Cardiff and firmly established herself within the development of Business News Wales. Rachel is now responsible for every aspect of web management, marketing and overall production of the Business News Wales brand.

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