R&D Tax Relief for the Construction Sector

Your construction company could be missing out on valuable tax relief, or a repayable cash tax credit if you are loss making

3,350 companies in Yorkshire and Humber alone benefited from Research & Development (“R&D”) tax relief claims in 2017/18, representing over £200m of tax savings.

Claims by the construction sector account for only around 4% of R&D claims nationally, yet aspects of many construction sector firms’ work can be similar to manufacturing which represents 25% of all R&D claims.This means that you may be overlooking tax relief or even better, cash back from HMRC!

Your key criteria for extra tax relief may be if you use novel materials, tools, or techniques whose development includes overcoming some technological uncertainty, and which are an advancement in the industry.

For profitable companies, this can deliver an additional tax deduction of 130% of qualifying R&D spend or for loss making companies, a cash credit worth 14.5% of the R&D spend.

Indicators that you may have qualifying R&D expenditure are:

• Specialist engineers on the project, either in house or consultants

• Stage payments due in part to having to overcome technical/materials milestones

• Materials being developed which are cheaper, greener, or more reliable; or new combustive or fire retardant materials

• Development of new materials, tools, or evaluation of existing materials/technology, combinations and adaptations of existing materials and products, or binding methods or coatings which haven’t been used in the market before

• New production techniques, including new modular off-site fabrication methods and which make the erection of buildings more efficient and accurate

• Contracts that contain extensive indemnity and retention clauses

• The existence of prototyping

• Advances in software to resolve challenges

The G+E team have recently worked on successful claims for a number of companies in the Construction sector including:

Modular Buildings
We recently saved a modular housebuilder over £150,000 by preparing a R&D claim for the new technology they have developed to build modular houses. The technology behind modular houses is still in its infancy and as different businesses develop modular technology in a variety of new ways, this makes it a good area for successful R&D tax relief claims.

Stonemason
A stone mason client has developed bespoke stonemasonry technology. We saved them £10,000 by submitting a R&D tax relief claim. Although a traditional industry, they have to keep pace with modern housebuilding trends leading to advances in technology.

Shopfitter
We recently saved a shop fitting company £30,000 by submitting a R&D claim for them. Shopfitting is another industry that you wouldn’t immediately think undertook
qualifying R&D, however this company undertakes really complex work and often has to create processes, materials and devices using technologies that don’t currently exist.

If you want to explore how you can access this valuable tax relief, please get in touch with our specialist R&D team to see if you qualify and the benefits this will have for your business. Please contact:

Steven Holmes, Business Tax Director –  sholmes@garbutt-elliott.co.uk 

Rob Durrant-Walker, Business Tax Technical Director – rdwalker@garbutt-elliott.co.uk