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Research and Development (R&D) tax relief for Architects

23rd October 2017

Exmouth Partner Simon Lewis takes a look at ways in which Architects can take advantage of R&D tax relief and explains what help is available to start a claim.

Could your practice benefit from a reduced tax bill or cash refund from the government? If you are not already claiming R&D tax relief, perhaps you should be. 

R&D tax relief is a corporation tax relief that may reduce a company’s tax bill or result in a payable tax credit. The amount of relief available varies according to whether the company qualifies for the more lucrative Small or Medium- sized Enterprise (SME) scheme or the large company scheme.

The idea that R&D tax relief is only applicable to those companies performing laboratory research work is a common misconception. Instead, it can apply to a wide range of industries, including those working on architectural design and engineering development.

Architecture is a sector not immediately connected with research and development activities, and because of this, there is a tendency for many architects to overlook R&D as a means of tax reduction. In addition to this, because R&D legislation contains a lot of terminology, businesses can also easily be put off making a claim.

Architects and design innovation

Many architects are now harnessing the latest design technology and experimenting with using new materials in building design and construction. So it should come as no surprise that many architects and design engineers are eligible to claim R&D tax credits so long as the claimant body is a limited company (LLPs are not eligible).

Architects are increasingly being asked to apply value engineering and innovation to technical problems to outperform established methods of design and construction. These can be in challenging developments in areas such as sound insulation, robustness and resistance, sustainability, fire resistance, thermal performance and stability.

What activities might qualify for R&D tax relief ?

There are many areas in which innovation takes place within the architectural design and process engineering development. Some of these might be:

  • Using innovative 3D printing techniques
  • Developing energy efficiency designs
  • Using lighting and sensor technology
  •  Designs that reduce the environmental impact
  • Making better use of existing technologies
  • Undertaking software development and adaptation
  • Studying and evaluating new materials
  • Improving construction methods
  • Developing innovative CAD designs and iterations
  •  Development of technical specifications and testing

If you are involved in any of the above, and there are more areas we can discuss with you, then you might be able to claim R&D tax relief.

There is a lot of terminology around R&D tax relief, but don’t be put off.

The key point is this:

  •  If you are an SME, for every £100,000 spent on R&D, you can receive a £230,000 deduction for expenditure from your corporate taxable profits. This will potentially trigger an extra tax saving of up to £24,700.
  • If you are loss- making there is the potential to claim a cash refund of up to £33,350 for expenditure.
  • If you are a large company, you trigger a £110,000 benefit for every £1,000,000 spent in the company’s accounts.

These are valuable benefits and if you think you are not spending any money on R&D, think again. You may well be.

Are there any pitfalls when making a claim for R&D tax relief ?

There are quite a few potential pitfalls. The tax legislation around R&D claims is highly complex, as is the case law. There are many grey areas to confuse the inexperienced. HMRC’s requirements are also constantly changing. Therefore, achieving successful R&D tax relief claims that maximise cash returned to the business depends on having a deep and current understanding not only of the legislation, but the way that HMRC applies it.

What if I don’t have the time or expertise to look into my eligibility for R&D tax relief ?

Speak to us. Thompson Jenner LLP has expertise and resources to help. After an initial, free, one-hour open discussion we can generally assess within reason the merit of any potential claim or refund. Our dedicated team of business tax planning advisers have the experience and specialist skills required to help you with any claim.

Are there other related sectors where R&D tax relief can be claimed ?

Yes. There are also a number of other related sectors where we can help you claim for these valuable benefits. These include:

  • Construction
  •  Mechanical and electrical engineering
  • Structural engineering
  • Surveyors
  • Builders
  • Shop fitters

 

If you would like to find out more or meet to discuss the services which we are able to provide, please contact Simon Lewis or one of our specialist Partners on  01392 258553 or 01395 279521 to arrange a free initial meeting.

 

 

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