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R&D Tax Credits for Architects: A Simple Guide

Posted on January 11, 2022

R&D Tax Credits for Architects is so much more than a safety net of cash for your firm, it can be used to leverage your business to new heights as a reward for innovation within your projects. Architecture is essential to our daily lives, shaping not only the physical environment that we live in, having a profound impact on its occupants, but also helping to shape cultures across the globe. Innovations within the sector have meant that we as a human race no longer only require shelter, but immersive building styles that make us feel something. 

As the new values of society and connectivity shape the industry, more Architectural firms are realising the potential that comes with claiming R&D Tax Credits for their work, but many are still missing out. The main reason for this is down to a common misconception that only highly scientific or pharmaceutical companies are eligible to claim the tax relief, but this is not the case. The purpose of the scheme is to reward businesses in ALL sectors as long as they meet the criteria, and the Architectural industry is extremely innovative by nature, meaning that there is a large chance that a project will qualify.

What are R&D Tax Credits?

R&D Tax Credits (Research and Development Tax Credits) are an allowance given by the UK Government to incentivise companies to invest in innovation. The scheme was introduced in 2000 and has provided funding support to millions of small, medium and large UK businesses, offering as much as £0.33p for every £1 spent on R&D projects. There are 2 separate schemes under the incentive, which are the SME scheme for small-medium sized businesses, and the RDEC scheme for large businesses.

Research and Development itself is the process of innovative activities taken to develop new services, products and processes and improving existing ones to make them better, with the desired outcome to overcome a scientific or technological uncertainty that is not widely known by industry professionals. R&D Tax Credits give businesses an opportunity to reduce their corporation tax bill, or to receive a refund from HMRC for carrying out innovation. 

HMRC regards a business’s projects as eligible to claim under the scheme when they are:

  • Looking to overcome a scientific or technological uncertainty
  • Making an advancement in technology or science
  • Making innovative progress that is not achievable by a competent professional within the industry
  • Creating new products, processes or services

What Are The Benefits of R&D Tax Credits for Architects?

There are endless benefits for Architects claiming through the scheme, and through using an R&D specialist, it will require minimal effort to process a claim. The fruitful financial benefits that come with a successful claim, such as a payment of up to £33p back for every £1 spent on qualifying activity is a no-brainer to see the many benefits of the scheme. Some more benefits of claiming R&D Tax Credits are:

  • R&D Tax Credits provide a reliable and immediately effective cash injection and source of non-repayable funding for businesses of all sizes.The money can then be invested into future R&D projects which not only allow you to reach your business goals, but to also claim larger amounts in the future.
  • It boosts innovation within your business, encouraging you to invest in R&D, but it also leverages the UK to the forefront of R&D and innovation across the globe, placing us as global leaders.
  • It also boosts economic growth, it has been reported that for every £1 spent on public R&D, it generates £7 of net economic value to the UK, and also generates £1.40 of private R&D investment.
  • The scheme creates a significant reduction to your current, past and future tax liabilities.
  • It allows you to leverage your business, growing exponentially and allowing you to stay ahead of any competition within your industry. It also facilitates job creation and attracts new experienced talent.
  • Ensures better business stability through better financial planning.

What Makes My Business Eligible?

Figuring out whether your business is eligible can seem confusing when it comes to R&D Tax Credits, and there are many misconceptions and myths which are off-putting to some businesses owners, but the criteria for your business to be eligible is very simple, you must:

  • Be a limited company
  • Be liable to corporation tax
  • Have carried out qualifying research and development activities and invested in these projects which are seeking to advance in science or technology within your industry
  • For SME’s (large companies), you must have 500 or fewer employees, have an annual turnover of no more than £100 million or a balance sheet of less that £86 million
  • For RDEC’s (large companies), you must have more than 500 employees, have an annual turnover of more than £100  million, or more than £86 million in gross assets

To find out more about whether your business is eligible, click here.

What Costs Qualify?

When it comes to qualifying expenditure, there are many costs that qualify for the scheme. One of the most time consuming parts of the claim process can be to work out your qualifying costs accurately to ensure that you are not only making the chances for a successful claim higher, but also maximising your claim to it’s full potential. This is why consulting with an experienced R&D specialist is always best to get the most out of your claim. We have outlined some general costs that can be claimed via the SME and RDEC scheme, but if you want to find out further information about the costs that are eligible to be claimed for, click here. The qualifying costs are:

  • Staff costs, such as salaries, NIC, wages and pension fund contributions.
  • Software costs
  • Subcontractor and externally provided worker costs
  • Consumables such as materials and utilities that were used in the R&D process
  • Volunteers for clinical trials
  • Prototypes
  • Contributions to independent research

Examples of R&D Tax Credits for Architects

There are many different project examples of R&D Tax Credits for Architects, as the industry is innovative by nature. The Architecture industry is constantly changing and innovating, which is why many firms are missing out on large sums of money by not claiming through the scheme. Some project examples are:

  • Developing modular prefabricated/off-site manufactured design.
  • Developing new or existing product and processes.
  • Using existing materials for new purposes .
  • Developing or using fabrication and modelling such as Building Information Modelling, or thermal/wind modelling.
  • Developing designs to be used for unique/challenging environments.
  • Developing testing methods, prototype design and software to resolve challenges faced by complex structures.
  • Design tools and software development for visualisation
  • Structural characteristics such as unique structures that are experimental by nature.
  • Developing new materials/developing existing material types not widely used, such as bioplastics, structural 3-D printing, solar-thermal cladding.
  • New approaches/unique adaptation to fire safety
  • BIM systems/ancillary services/outsourcing talent/subcontractors
  • Sustainable architectural projects, using sustainable materials such as timber, GRC, recycled or recovered materials. This also includes developing complex energy performance and carbon footprint developments.
  • Meeting demanding acoustic, natural light or thermal requirements that affect building fabric, this also includes Architectural developments involving listed/heritage structures and assets
  • Seeking BREEA, LEED, or Passivhaus

R&D Tax Credits for Architects FAQ’s

  • What is the average R&D Tax Credits for Architects claim value? £31,000
  • How do I claim? You can apply for R&D Tax Credits by using an R&D specialist, such as Green Jellyfish. To find out more or to contact us, click here. 
  • Can any work carried out by external specialists be claimed for? Mostly, yes but there may be some differences between claiming for R&D carried out by an in-house team and sub-contracted talent. 
  • Can I claim R&D Tax Credits if my Architectural firm is loss making? Yes, you can still claim R&D Tax Credits if you are a loss-making firm, and loss-making companies can actually claim up to 33% of their qualifying expenditure, whereas profit-making companies only receive up to 25% of their expenditure. You would relieve a partial or full cash-credit for your R&D expenditure, or you have the option to carry forward your losses to a future, profitable year. 
  • What costs can’t I include? The costs that are not classed as qualifying expenditure are generally the running costs of the business such as rent, heating, travel costs etc, and third party costs recharged back to clients. 
  • Can I claim for my previous Architectural projects? Yes! You can backdate your R&D Tax Credits claims which often helps businesses to get claims a lot larger than they originally expected. You can claim for projects carried out within the past two years from the most recent year-end. 
  • Am I eligible to claim as an Architectural practice set up as a partnership? No, unfortunately you will need to be registered as an LTF or LLC to be eligible to claim through the scheme.
  • I’m still unsure if this scheme is for me, what should I do? If you are still feeling unconfident with whether your business would be eligible, feel free to call Green Jellyfish at 033 000 20010 for a quick no-obligation phone call, to discuss this with you further. We are here to help.