You can claim the expenditure credit on some of the costs you incur from the start to the end of the R&D project.
R&D starts when work begins to resolve the scientific or technological uncertainty and ends when that uncertainty is resolved, or the work to resolve it stops.
The following information will tell you which costs you can and cannot claim for.
You can claim for the relevant proportion of consumable items used up in the R&D, this includes:
You cannot claim the costs if you sell or transfer ownership of the consumable items used up in the R&D.
Clinical trials volunteers
For R&D projects in the pharmaceutical industry, you can claim for payments made to the subjects of clinical trials.
Contributions for independent R&D
You can claim for contributions made for independent R&D, as long as you’re a large company.
The person receiving the contribution must be:
a qualifying body
a firm whose members are all individuals
They cannot be connected to your company.
The contributions made by you for the independent R&D must:
be relevant to your trade
not be sub-contracted by your company
You cannot claim any contributions if you’re a SME.
Data licence and cloud computing
For accounting periods beginning on or after 1 April 2023, qualifying expenditure is extended to include the relevant elements of data licence costs and cloud computing costs.
A data licence is a licence to access and use a collection of digital data.
Cloud computing includes:
You can claim for most data and cloud computing costs spent on R&D.
Externally provided worker costs
Workers supplied by a staff provider such as an employment agency, are classed as externally provided workers.
claim 100% of the relevant payments, if your company and the staff provider are connected
claim 65% of the relevant payments made to a staff provider, which is not connected to your company, if they supply externally provided workers for the project
For staff working directly on the R&D project, you can claim for the following costs, as long as they relate to R&D:
pension fund contributions
secondary Class 1 National Insurance contributions paid by the company
In specific circumstances you may also claim for an element of administrative or support staff who work to directly support a project, for example:
human resources used to recruit a specific person to work on the project
specialist cleaning staff
These are known as qualifying indirect activities.
The following are some examples of staff costs that you cannot claim for:
staff costs for clerical or maintenance work that would have been done anyway, like managing payroll
You can claim for software licence fees for R&D and a reasonable share of the costs for software partly used in your R&D activities.
Subcontracted expenditure cannot be claimed unless it’s directly undertaken by:
a qualifying body, for example a charity, higher education institute, scientific research organisation or health service body
a firm where each member is an individual
Examples of costs that do not qualify
The following are other examples of costs that you cannot claim for:
the production and distribution of goods and services
the cost of land
the cost of patents and trademarks
rent or rates