Are you making the most of R&D tax claims?

R&D tax claim

You could be sitting on some useful tax perks that you’re unaware of. Learn more about what the criteria are and how your projects might qualify.

Research and Development (R&D) tax reliefs support companies that work on innovative projects in science and technology. The words “science and technology” might put many people off applying for them. An architect might incorrectly assume that there is no “science and technology” in their projects, and that R&D tax credits aren’t for them. But there is plenty of potential for successful R&D claims within architectural projects.

Oregon State University timber research

Cross laminated timber is studied in a laboratory at Oregon State University. (Photo courtesy of Oregon State University)

“It’s a myth that you have to be working in pharmaceuticals or aerospace to qualify for R&D tax credits,” states Natalie Ong. She is Technical Consultant for Leyton, an innovation funding consultancy.

Another misconception among many which Natalie highlights is that qualifying for R&D does not necessarily have to be unique or an unprecedented discovery. “It could be an improvement on existing products or processes, including internal business improvement projects.”


The 4 essential criteria for R&D credits

Her first piece of advice for anyone with no idea where to start is to visit the webpage “Claiming Research and Development tax reliefs”. This sets out the four criteria.

Your project might, it suggests, research or develop a new process, product or service or improve on an existing one. The wording might seem intimidating: that’s where consultants come in. They can assess a specific portfolio of projects to understand if they qualify for R&D or not.


To get R&D relief you need to explain how a project:

  1. looked for an advance in science and technology
  2. had to overcome technical or scientific uncertainties
  3. tried to overcome this uncertainty
  4. could not be easily worked out by a professional in the field


Finding the R&D potential within your projects

“Once you have a better understanding of R&D, start looking at technically challenging projects in your portfolio,” Natalie advises. “If you’re struggling with the concept of R&D, look at projects with iterative elements to them: the projects where you have had to return again and again to the drawing board.”

She mentions several ”drivers” of qualifying R&D – the areas in which successful R&D claims are most common. Regulatory changes are one important driver. Unsurprisingly, for a period of time a common theme among R&D claims was fire safety. When new regulations come in, she explains, it invariably leads to a gap in public knowledge. Those committed to particular construction methods have to seek new materials or find new ways to satisfy new regulations. There is inevitably an amount of trial and error – fertile group for qualifying R&D.

Stringent project demands are also a major driver: Passivhaus or BREAMM standards, for example. She cites one client who had developed a novel fixture between internal and external timber frames to significantly improve existing methods of constructing a timber framed joint. This reduced the construction time and the risk of air leakage due to any poor sealing.


“Many clients deem their work to be just day-to-day, and not worthy of the description R&D. But an objective view from outside can see the finer differences.”


Other R&D drivers: MMC and infrastructure

Modern methods of construction (MMC) are, as you might expect, a productive area. Projects involving offsite construction, prefabricated and modular commonly crop up. A practice might want to develop its own prefabricated system from scratch because of a stringent project specification they need to meet.

She recalls one example of this: a timber-frame Passivhaus project that used a modular system. The client was requesting a standardized design but the interior layout had to be very flexible, offering users multifunctional rooms. Any complex interlinking factors that had to be considered in the design process, any onsite constraints or stringent project specs: these area good base to start exploring.

Many of Natalie’s clients have also identified relevant R&D in projects involving upgrading of existing infrastructure. “When you upgrade existing infrastructure you are being set a boundary of sorts: you have to work with existing constraints,” she explains. But it is not the case that HMRC favours any particular area or subject: it is simply that projects involving these factors happen to have been particularly fruitful among designers in meeting the government’s criteria. Technical challenges faced in a project often drives the development of innovative solutions.


How can you get the best out of an R&D consultant?

“One approach we take is to list every single project – typically for smaller claims. Alternatively, if there’s more than 50 projects, we might ask if there is a theme running through them. I typically discuss with clients a wide range of projects, and from there I come up with the themes. I run through that with my clients to confirm that the themes do cover the breadth of R&D work.”

If a client has a huge portfolio of projects to assess, she sometimes advises clients to group them by theme. They would proceed based on the assumption that there is more time associated with the more technically challenging, higher-value contracts; and that there is likely to be more R&D potential.

The client might then identify a project within each theme where they are uncertain whether there’s R&D potential. If, following discussion, that project is unsuitable then it is likely that any other project below that need not be accounted for, and that anything above that is worth consideration and appraisal.

“R&D can be claimed on unsuccessful projects,” she says, rebutting one last misconception. This is an important point to remember, given how much time and effort that designers spend on bids and competitions that do not always go the way we want them to.