Categories of eligible expenditure - Merged scheme
The R&D qualifying expenditure for tax credits includes the costs of paying people to do the work, paying for the consumables used during the work, and paying for external resources where necessary. Most costs are common to both schemes, with some notable exceptions.
Costs that do not fit in any of the cost categories cannot be included, no matter how vital that spending was for the success of the R&D project.
Staff
Staff costs includes salary, bonuses, employer’s NIC and pension costs
Out-of-pocket expenses can also be included, if they relate to R&D projects
Raw materials
Raw materials used up, consumed or destroyed during the R&D project can be included
Raw materials used to produce goods intended for sale, for example in a trial run of production machinery, cannot be included
Utilities
Heat and light costs can be included, but rent, broadband and other business expenses cannot
Software cost related to the R&D projects are eligible
Externally provided workers
Where workers are paid through a third party to provide services related to R&D, a proportion of these costs can be included
Subcontractors
Payments made to subcontractors to carry out activities related to R&D can be included in the claim.
Clinical trials
Payments made to clinical trial volunteers can be included in their own category. Other costs, such as payments made to subcontractors running the trials, or raw materials required for the trials can be included in the relevant categories.
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