writes Peter Wright, partner, Haines Watts. The construction sector is not traditionally an area which one would ever associate with people in white coats undertaking R&D activities, which is probably why so few companies in the sector are taking advantage of the tax reliefs that are available.
R&D tax relief is a valuable relief – every £100,000 of eligible employment costs can generate a tax saving of £25,000 – and is available where companies can demonstrate development work in design and engineering that involves overcoming technological problems.
If you consider that many construction projects are unique and have specific technical issues to overcome, then it is not so surprising that companies in the sector could qualify for this relief. Any company that undertakes design and build work, for example, will almost certainly qualify in respect of a proportion of its employment expenditure. The relief can also extend to expenditure on specialist third parties such as architects, structural engineers, etc.
The Government is keen to transform the construction process in the UK with a view to creating affordable buildings that are safer, healthier and use less energy. The recent government white paper on industrial strategy includes measures to provide an extra £725 million to support innovation in construction and life sciences through the Industrial Strategy Challenge Fund.
Another key policy of the Government is to raise research and development investment to 2.4% of GDP by 2027. That is only likely to be achieved by continuing to offer tax incentives such as R&D tax relief.
For the foreseeable future, therefore, construction companies can anticipate tax savings through claiming this relief – it is just a shame that so few seem to be taking advantage of this opportunity.
To find out if you could claim this government tax incentive scheme designed to encourage companies to invest in R&D, contact Haines Watts: