Innovation within construction is rewarded with a generous Government tax incentive scheme that enables construction companies to claim up to 33p for every pound spent across a broad range of technical and business activities. R&D stands for research and development, thus any construction firm carrying out projects in which the business is mitigating project risks through technical activities in attempting to ‘resolve scientific or technological uncertainties’ may be eligible.
In brief, if a construction project involves developments that are not readily deducible at the onset, or there is uncertainty on how to execute it, then the company is likely to be highly eligible for R&D tax credits.
Why are R&D tax credits essential for innovation?
Construction is a fast-paced industry in which the goalposts are always changing, as the business and technological environments are highly constrained, and projects must adhere to strict industry codes and standards. The financial and technological risks are amplified within the construction industry, as large expenditures are typically involved where projects are highly sensitive to numerous factors such as planning, site access restrictions, etcetera. As a result, construction-based companies rely on developing ever advanced methodologies throughout the project life cycle. However, these developments typically push the envelope of established knowledge, and thus these companies actively seek out more financial stability as a means to mitigate the business risks of conducting such work.
The R&D Tax incentive schemes are key in providing tangible support for these innovative activities within the construction industry, where companies can supplement cash flows to support high-risk activities such as site-based trials and experiments. This in turn leads to further innovation, as companies gain new technical knowledge, which opens up applications to other projects.
The motivation of the R&D scheme is a government-led initiative to reward companies innovating to be competitive. In this context, the government is rewarding construction firms for coming up with new solutions to problems in ways that haven’t yet been explored.
Do I qualify?
There is an assumption within construction that R&D is only eligible for companies working on cutting edge projects or with R&D laboratories. This assumption is false – research and development spans an array of industries and its various projects. Numerous activities that may seem conventional on the surface, have been qualified after further examination by Kene Partners. With the average Kene Partners claim being £66,000, it is useful to know if your company is likely to qualify. The construction based projects listed below show the typical examples that have qualified for the R&D scheme:
- Using new materials that will increase the lifespan of buildings
- Adapting construction methods to problem solve
- Developing solutions that are more environmentally friendly
- Increasing the energy efficiency of buildings and their flexibility in usability
The construction industry continues to operate in a highly regulated and constrained field, where numerous projects encounter uncertainties involving anything ranging from the surface finish of a material to the remediation of foundations. Innovation based activities within these projects are fundamental to solving these uncertainties, and thus by extension, this can be qualified in an R&D Tax Claim; the scheme exists to reward the company, as it has created value not only for itself but in the skill set of its professionals and in the supply chain.