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Haines Watts Hereford Phone icon 01432 273189

Many of the business owners I talk to have heard of R&D tax relief but often they assume it’s not applicable to their sector. I have found this to be particularly true in the construction industry despite the fact that so many businesses in the sector are active in developing new and groundbreaking (excuse the pun) building techniques and materials.

It is worth reiterating that R&D tax credits are available to companies in every industry, including construction. As long as the company in question is developing new products, services/systems or improving existing ones, then this valuable relief is applicable.

Government Incentives

Whilst being apparently modest about it, the construction industry is actually very innovative and the UK’s Grand Challenges policy is likely to encourage more companies to push the boundaries of what is possible in building. This Government industrial strategy includes a mission to at least halve the energy use of new buildings by 2030 through developing innovative energy and low carbon technologies, and driving lower cost and high-quality construction techniques. This will also assist in reducing the cost of retrofitting existing buildings to make them more efficient and sustainable.

The mission is backed by £170 million of public money through the Transforming Construction Industrial Strategy Challenge Fund which may well be of interest to entrepreneurial business. However, it is worth noting that, although grants and R&D tax credits are not mutually exclusive, their relationship can be complicated due to EU rules regarding state aid competition, so careful planning is needed to use both together.

In addition to the Grand Challenges policy, the Government has highlighted R&D tax incentives in its Construction Sector Deal as a vital source of funding to boost the industry.

Qualifying Activity

We are seeing an increase in R&D claims from companies who are using their own innovation in response to the transformation in the sector. For example, we have recently made claims for companies undertaking the following:

  • The development of innovative new waste water heat recovery systems and other energy saving products;
  • The development of a device to integrate a modern lighting control system to more traditional systems (including application development);
  • The experimentation of new materials in conservation techniques.

Often, because the definition of research and development, for the purposes of claiming R&D tax credits, is broad, specialist contractors have difficulty in identifying their work as R&D.

Other examples where your company could qualify include:

  • Greener/sustainable construction;
  • Work to meet new regulatory requirements e.g. low or zero carbon technologies, health & safety and fire;
  • The redesign of products/materials to improve quality, performance, reliability & safety and to reduce costs;
  • The development of Buildings Information Management (BIM) software;
  • The development of new methodologies to enable offsite fabrication/construction;
  • The solving of technical problems which arise during or after construction.

If you feel that your company may be undertaking R&D activities and you wondering if your company should be making a claim for R&D tax relief, please contact us.

Want to know more? Call us on 01432 273189 or email hereford@hwca.com

About the author

Sophie Powell

Sophie joined Haines Watts in February 2017. She qualified as a Certified Accountant in 2005 and has over 18 years’ experience working in local and national practices. She has experience in a wide range of accountancy and taxation services.

As a Manager in the specialist R&D Tax Team at Haines Watts Hereford, Sophie helps companies to identify qualifying expenditure for R&D tax relief and drafts claims submissions for HMRC.

Sophie lives in Hereford with her husband and two sons. She is an avid film fan and enjoys spending her spare time with friends and family.

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